Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — ENERGY

Coal Industry Dispute

Mr. Gerald Howarth: asked the Secretary of State for Energy if he will make a statement on the strike by some miners.

Mr. Ron Davies: asked the Secretary of State for Energy if he will make a statement on the latest situation in the coal industry dispute.

Mr. Willie W. Hamilton: asked the Secretary of State for Energy if he will make a further statement on the dispute in the coal industry.

Mr. Chapman: asked the Secretary of State for Energy if he will make a statement on recent events relating to the coal industry dispute.

Mr. Strang: asked the Secretary of State for Energy if he will make a statement on the coal industry dispute.

Mr. Proctor: asked the Secretary of State for Energy if he will make a statement on the current situation in the coal mining industry.

Mr. Hannam: asked the Secretary of State for Energy if he will make a statement on the coal dispute.

Mr. Knox: asked the Secretary of State for Energy whether he will make a statement on the coal strike.

Mr. Douglas: asked the Secretary of State for Energy if he will make a further statement on the mining industry dispute.

The Secretary of State for Energy (Mr. Peter Walker): Of the 174 pits, there are now 148 with men present and 66 of these are producing coal. Coal production is at its highest level since the dispute started. Since 5 November more than 16,500 miners who were on strike have reported for work. Coal stocks at the power stations remain at a similar level to what they were in August.
At a meeting with representatives of the Trades Union Congress last Friday, I expressed the Government's regret that the compromise proposal put forward by the Advisory, Conciliation and Arbitration Service, and the detailed agreement reached with NACODS, had not provided proposals acceptable to the leadership of the National Union of Mineworkers. With two of the three mining unions not on strike, and with the one third of the NUM which had a ballot voting overwhelmingly against strike action, the Government regret that the two thirds of the NUM continuing on strike have been deprived of the opportunity to express their views through a national ballot.

Mr. Howarth: I am grateful to my right hon. Friend for the encouraging news about the number of men who are working and the number of pits that are remaining open. In view of his slightly alarming remarks last weekend about being available for further discussions, will he assure the House and the working miners that further talks between the NUM and the National Coal Board will not take place until there is genuine evidence of a fundamental shift in the attitude of the NUM to uneconomic pits?

Mr. Walker: I have told the TUC and the mining unions that I am willing to have talks with union leaders or the TUC at any time. That is the correct position for me to take. In my talks with the TUC I made it clear that it would be impossible to end the dispute so long as there was a totally unreasonable demand that every pit, no matter how uneconomic, should be kept open until the last ton of coal was extracted. That is the reality of the scene.

Mr. Davies: Notwithstanding those figures, does the Secretary of State accept that in parts of the mining industry the strike is solid and there is no prospect of breaking it? In view of that fact and the increasing doubt being cast over the Government's accountancy figures, most recently by the London Business School, does the Secretary of State appreciate that there must be negotiations? Would it not be helpful if he instructed Mr. MacGregor to withdraw his weekend statement about preconditions and took the necessary steps to get the parties involved back round the negotiating table?

Mr. Walker: I remind the hon. Gentleman that there have been seven rounds of negotiations. In the one at ACAS, ACAS came forward with a compromise proposal. At the end of seven rounds of negotiations Mr. Scargill is constantly on record as saying that he has not moved his position since 6 March. If the hon. Gentleman wants a settlement to the dispute, he should put pressure on Mr. Scargill.

Mr. Hamilton: Since it is clear day by day that there can be no winners and no losers in the contest—we are all losers, including the miners—will the Secretary of State take an initiative and agree to call together all those involved in the dispute so long as they undertake, before they start discussions, that there will be flexibility on all sides?

Mr. Walker: My difficulty in replying to that question is that in July one side suggested a range of new proposals which showed considerable flexibility, and, at the behest of another miners' union, went to ACAS and agreed a compromise proposal. On Friday the TUC told me that negotiations must take place between the two parties concerned. Until the one party which has refused to move since 6 March moves, there will not be the negotiated settlement which we all want.

Mr. Chapman: Regretting the intransigence of Mr. Scargill, but recognising that some striking miners understandably fear that there will be no other employment in the mining communities, may I ask my right hon. Friend to report progress on NCB (Enterprise) Ltd., which was set up to encourage alternative industries in uneconomic mining areas?

Mr. Walker: As I reported to the House, the company was set up with an initial capital of £5 million. Immediately there were a substantial number of inquiries and applications, and I agreed to double the capital of the company. I have informed the National Coal Board that the Government would be happy to finance an extension of its activities so that that important work can be carried out.

Mr. Strang: Why does the Secretary of State not facilitate negotiations without preconditions between the NCB and the NUM? Is it not clear that the Government are more concerned to inflict a defeat on the NUM, as part of their assault on the trade union movement, than to secure a negotiated settlement in the interests of the mining industry? How much damage will be done to the economic and social fabric of the country before the Government recognise that the vast majority of miners will return to work only after a negotiated settlement?

Mr. Walker: The tone of the hon. Gentleman's remarks is very different from the tone of the remarks that I heard in my talks with the TUC on Friday. There have

been seven rounds of negotiations without preconditions, one under the auspices of ACAS, which came forward with a compromise proposal. I have heard no criticism of that compromise proposal by the TUC or the Labour party, and it is time that they tried to persuade Mr. Scargill to accept it.

Mr. Proctor: Does my right hon. Friend agree that the real long-term damage to the coal mining industry has been caused during this dispute by the closure of coal faces in economic pits and the loss of contracts to the industry? Will my right hon. Friend comment on that?

Mr. Walker: It is true that 23 producing faces have been lost during the dispute, which is a tragic loss to the industry. As my hon. Friend knows, we were conducting an active and successful campaign to persuade industries to convert to coal. I had hoped that 1,000 firms would convert to coal this year, but the entire campaign has been destroyed by the dispute.

Mr. Hannam: Does my right hon. Friend agree that the dispute is rapidly becoming more concerned with the future of the president of the National Union of Mineworkers than of the coal miners? Will he commiserate with the TUC, which must negotiate on behalf of a union which refuses to budge an inch towards a settlement?

Mr. Walker: I understand the diverse problems of the TUC. From my talks last week and my communications with the TUC, I am sure that it is anxious that the dispute should end with a negotiated settlement as speedily as possible. I told the trade union leaders who attended the talks on Friday that almost no other British trade union has an offer available to it as generous as the offer available to the miners.

Mr. Wrigglesworth: Does the Secretary of State agree that the only people who will change the views of the leadership of the NUM are the members of the union and its executive? What plans does he have for discussions with the TUC and others, and what public action will he take to persuade those members of the union and of the executive to try to bring about that change?

Mr. Walker: I am sure that the 16,500 union members who have returned to work since 5 November are having an impact on thinking.

Mr. Knox: Apart from our foreign competitors, can my right hon. Friend think of anyone who has benefited from the strike?

Mr. Walker: No, Sir.

Mr. Douglas: Does the Secretary of State accept that, for the first time during the dispute, he has gone a little way towards meeting trade unionists, which in a sense is welcome? If we accept that his view concurs with that of the TUC—that the only people who can settle the strike are the NCB and the NUM — what deters him from using his good offices to bring together those two parties in the foreseeable future? It is a mad strike, which must be resolved by sitting round the table, not by attrition.

Mr. Walker: I repeat that on several occasions the two sides have met, and on one occasion, under the auspices not of a Tory politician but ACAS, a compromise plan put forward by ACAS was rejected by the leadership of the


NUM. Likewise, the leadership of the NUM has always refused to put the terms on offer to the miners in a ballot. That is the manner in which it is operating.

Mr. Aitken: Will my right hon. Friend give special attention to the position in the Kent coalfield where, before the strike began, three pits were losing £25 million a year, which amounts to a subsidy of £10,000 a year from the taxpayer to each of the 2,500 miners? As the position has deteriorated still further, because of geological and other changes, and as every sensible person in the Kent community knows that we cannot go on for ever in the same lunatic uneconomic way as before, will my right hon. Friend give special priority to the idea of an imaginative scheme by NCB (Enterprise) Ltd. after this strike totters to its close?

Mr. Walker: I assure my hon. Friend that wherever there is a potential closure due to a pit becoming uneconomic and unable to contribute successfully to the future of the industry, the new enterprise company which has been created will deal with the problem. It will have the finance, the managerial advice and, frequently, accommodation and a whole range of services to enable fresh and new enterprises to come into such communities.

Mr. Benn: Is the right hon. Gentleman aware that for over a year, since the overtime ban began, he has come to the House week after week and said that the strike is crumbling? Has that not been wholly false, and has not the information that he has given misled the House and the country and deceived himself? Is not his policy in a shambles, and is not the only conclusion that can be drawn from his refusal to encourage talks that he and the Cabinet wish the strike to continue, which is the conclusion that most miners have already drawn?

Mr. Walker: Fortunately, the conclusion that most miners have drawn about the right hon. Gentleman is that his rhetoric during the dispute is different from his record as Secretary of State.
Secondly, as to disputes crumbling—

Mr. Benn: Answer the question.

Mr. Walker: I shall.
As to disputes crumbling, I recall that the right hon. Gentleman told me that the movement of coal would stop in April, since when 25 million tonnes have been moved.

Mr. Rost: As the taxpayer has to pay the bills for this senseless strike, has he not the right to demand that the board should do what every other private and public enterprise would have had to do by now to contain its losses, which is to announce a deadline for a return to work, after which the generous guarantee of a job will no longer be valid? When will the board start to manage?

Mr. Walker: Coal is one of this country's most important resources. Coal has a good, sound and expanding future. I hope that the pressures of all those who are concerned with the future of the industry will ensure that we move back to the potentiality of high investment and good production. I should not want to do anything to damage that prospect.

Mr. Hardy: The Secretary of State mentioned my association, NACODS. Does he accept that the agreement appears to have considerable fragility about it as a result of actions by the NCB? Does he further accept that that suggests that the chairman of the NCB should no longer

be allowed to occupy his office, not least because of the pessimistic statement that he made at the very time when the Secretary of State was meeting the trade unions last week? Is it not time for the right hon. Gentleman to take a further initiative to achieve a negotiated settlement, and should he not suggest to Mr. MacGregor that the time has come when there should be an end to the visits to Hobart house of furtive emissaries from the Conservative party?

Mr. Walker: The chairman of the NCB has been through seven rounds of negotiations. He has been to ACAS and accepted its compromise proposal, and he has negotiated with NACODS in great detail and reached a settlement. Therefore, nobody can accuse him of inflexibility. As to being pessimistic, on all seven occasions the chairman has been opposed by somebody whose one boast is that he has not moved since 6 March.

Mr. Gale: Will my right hon. Friend reaffirm that the precondition to the negotiations having been laid down by the president of the National Union of Mineworkers, contrary to the impression that the general secretary of the Trades Union Congress sought to give on Radio 4 this morning, the union has not moved from the start of the strike from its entrenched position? Will my right hon. Friend undertake that there will be no further negotiations until and unless the NUM moves from that entrenched position?

Mr. Walker: The basic demand that every pit, no matter how uneconomic, must be kept going until all coal is exhausted unless there are safety or geological reasons for doing otherwise has never been made by any NUM leader in the past and, as far as I know, has never been made in any other coal industry. It is not just an absurd demand. It would do permanent damage to the coal industry if it were met.

Mr. Wallace: I welcome the right hon. Gentleman's meeting with the TUC, but I wonder whether the background of the talks was helped by the Government taking £1 off supplementary benefit. Is it wise, for the atmosphere of future talks, for the Government to proceed with their announced intention to strip miners of housing benefit if they are paying rent?

Mr. Walker: Certain advice has been given in NUM magazines about how to obtain additional money from social security. If the hon. Gentleman is interested, he should study that advice. It was given positively on the basis not of what were basic needs but of how to organise these matters.

Mr. Orme: If the tone of the meeting with the TUC was as good as the right hon. Gentleman suggests, why did he not respond to the TUC? The congress put forward positive proposals. The right hon. Gentleman will know that, according to the accountancy report and that of the London Business School, the basis of uneconomic pits has been challenged. Therefore, there is a basis on which to resume talks. Why does the right hon. Gentleman not play a role in seeing that those talks are held, instead of waiting another three or four weeks before anything happens?

Mr. Walker: The right hon. Gentleman asks why I did not respond. The TUC did not come to the meeting on that basis. It started the talks, quite correctly, by saying that it was not in a position to negotiate. We exchanged views on its suggestions. The TUC's problem, as Mr. Willis said afterwards, was that it did not consider that anyone could


back down before the negotiations and therefore that it was wrong to suggest that the NUM should move from its position before negotiations began. I had to point out to the TUC representatives that there had been seven rounds of negotiations and that Mr. Scargill had not backed down on any.

Gas Prices

Mr. Malone: asked the Secretary of State for Energy if he will make a statement on the Government's current policy on gas pricing.

The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith): Gas prices are determined by the British Gas Corporation, taking into account the need to achieve an adequate return on capital, and to obtain an adequate and continuing supply of gas.

Mr. Malone: I am grateful to my right hon. Friend for that reply. Can he confirm that it is Government policy to ensure that gas is provided to the consumer at the most competitive prices? In addition, will he undertake that in the event of gas prices perhaps falling, as a result of increased efficiency on the part of the British Gas Corporation, prices will reach the consumer unaltered and that there will be no interference to put them up?

Mr. Buchanan-Smith: Pricing is the responsibility of the British Gas Corporation. We expect the corporation to be competitive. I hope my hon. Friend welcomes the fact that, under its financial targets and performance aims up to 1986–87, it is expected to achieve a reduction in unit net trading costs in real terms of 12 per cent. compared with 1982–83. There is strong pressure on the British Gas Corporation to be efficient, and I am sure that it will be.

Mr. Rowlands: As future gas prices and supplies may be determined by the decisions to go ahead with the Sleipner contract, will the Minister say what is the Government's position on it? As I understand it, negotiations are virtually complete between the British Gas Corporation and its opposite number. Where do the Government stand on the Sleipner contract?

Mr. Buchanan-Smith: The Sleipner negotiation is not confined to the British Gas Corporation and the Norwegian company Statoil. There are a number of other big financial considerations which affect the future of gas supplies to the United Kingdom and our balance of payments. Negotiations continue on those issues. Until they are concluded, I regret that it is not possible to answer the hon. Gentleman's question.

NCB Property (Vandalism)

Mr. Merchant: asked the Secretary of State for Energy if, when he next meets the chairman of the National Coal Board, he will discuss the incidence of vandalism against National Coal Board property and the resulting financial cost to the board.

The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt): I deplore the malicious acts of vandalism which have been carried out against NCB property during the present strike. They can only damage further the prospects for the industry.

Mr. Merchant: In view of the serious acts of vandalism which have taken place in many areas,

including Easington colliery, near my constituency, where a few weeks ago windows were broken and cars overturned, will my hon. Friend consider encouraging the chairman of the NCB to institute disciplinary proceedings against those miners found guilty of such offences?

Mr. Hunt: Since the beginning of the dispute about 450 employees have been dimissed by the NCB. These include a significant number for offences associated with vandalism. There can be no possible excuse for causing wilful damage to an industry which, at the start of this pointless strike, had such great potential for the future.

Mr. Allen McKay: When the Minister meets the chairman of the NCB to discuss vandalism, will he suggest to him that as, after seven meetings, he has found himself incapable of bringing the strike to a successful conclusion it is time that he went?

Mr. Hunt: As my right hon. Friend has already pointed out, in the course of the dispute there has been just one conciliation proposal from ACAS. After careful consideration, that was accepted by the chairman of the NCB but rejected by the president of the NUM.

Sir Kenneth Lewis: Is it not a fact that of all the many speeches that Arthur Scargill has made, he has not made one statement urging his members not to vandalise their own plant and tools, because, when they go back to work, any such damage will be to their detriment?

Mr. Hunt: The strike has been characterised by most unhelpful remarks from the president of the NUM. Perhaps the most unhelpful came today. Hon. Members may have noticed that he now calls for all forms of industrial action on a massive scale in support of the miners. I am certain that he will receive the same sort of raspberry to that ridiculous irresponsible notion as he has throughout the dispute.

Mr. Dormand: Is it not strange that the hon. Member for Newcastle upon Tyne, Central (Mr. Merchant) should refer to my constituency, Easington, as being near to his, when it is not, and is it not even more strange that he should refer to an incident which took place five months ago? Will he join me in my constituency to see the whole context of what has happened?

Mr. Hunt: The real damage in the dispute and the real financial cost has been, fòr instance, in the tragic investment situation. It now looks as if the industrial action, if it continues till the end of March, will mean a reduction in investment spending of nearly £500 million.

Mr. Adley: Just for once, would it not be wonderful to hear one Labour Member stand up and unequivocally deplore vandalism?

Mr. Hunt: I believe and hope that I am speaking for the House in condemning without reservation the sort of vandalism that we have seen.

Mr. Eadie: If and when the Secretary of State meets the chairman of the NCB, will he ask him why he seems to come to life only when there is a move to try to resolve the miners' dispute? He must be about the most expensive chairman of any nationalised industry. Is it not vandalism for the chairman of the NCB to make statements on the eve of the Secretary of State's meeting with the TUC suggesting that there is no prospect of the strike ending? It must surely be unparalleled for a Cabinet Minister to


have his authority undermined in that way. Is it not time that Mr. MacGregor was asked to go? He has done too much damage already.

Mr. Hunt: The chairman of the NCB has made what is undoubtedly the most generous offer that the miners have had since nationalisation. It is interesting to note that not one hon. Member so far has said that it is not unreasonable for the president of the NUM to stick to the irresponsible demand that no pit, however uneconomic, should close while there is still an ounce of coal left in it.

British Nuclear Fuels plc

Mr. Orme asked: the Secretary of State for Energy what plans he has for the privatisation of British Nuclear Fuels.

Mr. Peter Walker: We have no plans at present to sell shares in British Nuclear Fuels plc.

Mr. Orme: I welcome that statement, but will the right hon. Gentleman tell the management of British Nuclear Fuels to stop talking publicly about privatisation, as that will only get the public's back up and do great damage?

Mr. Walker: I gather that in an interview with one particular journalist the chairman gave his views as to the potentiality of privatisation and implied that, with regard to the staff of British Nuclear Fuels, privatisation would be welcome. But he explained afterwards that he had expressed his own personal view.

Energy Efficiency Office

Mr. Tom Cox: asked the Secretary of State for Energy what is the budget of the Energy Efficiency Office for the current year; what is its role in relation to the coordination of energy conservation policy; and if he will make a statement.

Mr. David Hunt: The Energy Efficiency Office's budget for 1984–85 is £18·6 million. My right hon. Friend the Secretary of State set up the office to spearhead the drive for greater energy efficiency in industry, commerce and the home. Considerable progress has already been made.

Mr. Cox: In view of that reply, will the Minister give an assurance that the Government's financial policies, including those on rate capping and so on, will not harm energy conservation programmes throughout the country? In view of the urgency of the matter, why is there still a division of responsibility as between the Department of Energy and the Department of the Environment? Why cannot everything come under one Department —preferably the Department of Energy?

Mr. Hunt: I assure the hon. Gentleman that every possible incentive is being given to local authorities—I have recently met a number of them—to spearhead the energy efficiency drive. It is a sign of confidence that the Government have increased the budget of the Energy Efficiency Office within the Department by 34 per cent. over the past year.

Mr. Boyes: How can the Minister talk about confidence in the Government when Cape Insulation in my constituency gave notice on 4 December to 360 or 370 men that the company would close on 21 December? Is it not a futile use of Government money to spend it on glossy

brochures and leaflets when the Government are not allowing local authorities the finance to use those products and thus to keep people in work?

Mr. Hunt: I sympathise with the hon. Gentleman about the very serious redundancies caused by the closure of Cape Industries in Washington, but for some time there has been over-capacity in that area of the market. With the increased advance in advertising and the "lift a finger" campaign already showing signs of tremendous success, I very much hope that we shall see an upsurge of activity in that sphere.

Mr. Wallace: How many local authorities have written to the Secretary of State in the past 12 months saying that they are having difficulty in planning and implementing energy conservation measures because of capital restrictions that are imposed on them by the Department of the Environment?

Mr. Hunt: There has been a tremendous amount of interest in the energy efficiency campaign on the part of local authorities. More than 250 local authorities have sought advice from the Energy Efficiency Office and are participating in the crescendo that we are now reaching in this important campaign.

Nuclear Power

Mr. Skeet: asked the Secretary of State for Energy if he will make a statement on the prospects for nuclear power in the United Kingdom.

The Parliamentary Under-Secretary of State for Energy (Mr. Alastair Goodlad): The Government attach considerable importance to the continuing safe and economic development of nuclear power.

Mr. Skeet: Does my hon. Friend agree that, after Sizewell, there does not appear to be a programme? Will he bear in mind the needs of the nuclear industry? Furthermore, will he take into account the fact that while 17 per cent. of total electricity is produced by nuclear means in the United Kingdom, the French, who are much more competitive, produce more than 50 per cent. of their total electricity from that source?

Mr. Goodlad: My hon. Friend is correct in what he says about France. The Government consider that a prudent energy policy requires the country to have available a range of supply options, including an appropriate nuclear component. As my hon. Friend says, in 1983 nuclear power contributed 17 per cent. of the United Kingdom's electricity supply. When the three AGRs currently being commissioned are fully operational, nuclear power could be contributing as much as a quarter of our electricity requirements. Our nuclear generating capacity will then have risen from 6·5 to 9·5 GW.
The Government expect that nuclear power will form an increasing component of our electricity supply in the longer term, provided that nuclear stations can be built to time and cost. The number of new nuclear stations will depend on several factors, including the level of electricity demand.

Mr. Campbell-Savours: Is not the future of the nuclear power industry very much dependent on its competitive position as against coal? Do the Government take note of the way in which the accounts of companies and organisations involved in the nuclear industry are


drawn up? If they do, how do they take note of those accounts? Do they take similar note of the National Coal Board accounts, with which the nuclear industry has to compete? Will the Minister ensure that the accounting procedures of both organisations are published openly so that we can all study them?

Mr. Goodlad: I note what the hon. Gentleman says. We have every confidence in the accountants concerned.

Coal Liquefaction

Mr. Dormand: asked the Secretary of State for Energy if he will make a statement on the progress of coal liquefaction.

Mr. David Hunt: The National Coal Board has completed the basic design work for its liquefaction project at Point of Ayr. I am delighted to be able now to announce that the Commission of the European Community has offered aid of £4·8 million. The board expects to begin work on the construction phase early in the new year.

Mr. Dormand: Does the Minister agree that liquefaction is most important for the future of the coal industry? Does he agree that the Government first used the excuse of lack of private capital for the slow development of coal liquefaction? Is the Minister now using the miners' strike as an excuse for even slower development? The Minister has said nothing about Government finance. Will he say something about it now?

Mr. Hunt: This Minister is well aware of the hon. Gentleman's interest in the subject. It is a vital subject. The National Coal Board is discussing terms of participation with a private sector company. Such participation is expected to release the £2·5 million balance of the Department's contribution, which has already been substantial in the design stage.

Mr. Eadie: Does the Minister realise that his Department has been fiddling around with the liquefaction scheme for five and a half years? At the end of that it seems that all we shall have will be a glorified laboratory scheme on a colliery site. Is it any wonder that our scientists are disillusioned with the Government's approach to science and technology?

Mr. Hunt: I do not accept what the hon. Gentleman says. The project is important. Completion of the NCB contract with the EEC will trigger the start of the construction phase work. That will go ahead with the Government's full support.

Electricity Prices

Mr. Baldry: asked the Secretary of State for Energy if he will make a statement on the estimated increases in electricity prices to industry during the coming year.

Mr. Peter Walker: Electricity tariffs for industrial consumers are determined by the electricity supply industry. I understand that area boards will not be increasing tariffs this winter.

Mr. Baldry: I am delighted to hear that news, because industry needs to know well in advance, when it is budgeting, what prices might do in the coming year. Is my right hon. Friend aware that some industries have been

worried that one of the effects of the damaging miner's strike will be to make them less competitive because electricty prices will go up?

Mr. Walker: I am aware of the importance to industry of keeping electricity prices as low as possible. That is the electricity industry's objective. I am pleased to say that electricity prices to industrial consumers have fallen on average by 8 per cent. in real terms in the last two years.

Mr. Nellist: Does the Secretary of State agree that he has wasted £4,400 million in the last 10 months attacking the National Union of Mineworkers and that a large part of that cost will fall on industries such as the electricity industry, resulting in price increases in the coming months or years? Will not old-age pensioners between the ages of 70 and 85, whose heating benefits have been cut, and the families of striking miners whose benefits have also been cut, have to bear the cost of the Government's attack on the miners and their families in the last 10 months? Yet again the people least able to bear the cost will have to bear it.

Mr. Walker: As I know of the hon. Gentleman's passion for looking after pensioners, I know that he will be doing all that he can to persuade Mr. Scargill to accept the very good terms available.

Mr. Heathcoat-Amory: asked the Secretary of State for Energy what is the average electricity price charged to industrial customers in the United Kingdom; and what information he has on the comparable figure in France.

Mr. Goodlad: Electricity prices to industrial consumers vary greatly within all countries, according to the nature of the load being supplied. In general, however, French prices are the lowest in Europe and are, typically, up to 20 per cent. lower than those in the United Kingdom and other EEC states. This is largely due to the greater proportion of electricity generated by nuclear power in France.

Mr. Heathcoat-Amory: As French electricity prices put British industry at a competitive disadvantage, which is bad for investment and jobs, will my hon. Friend explain some of the reasons for the price differential? Does he agree that the large French nuclear programme enables that country to generate electricity significantly more cheaply than we can manage?

Mr. Goodlad: Yes, Sir. My hon. Friend is correct.

Mr. Pike: Does the Minister accept that while European electricity suppliers may advertise certain tariffs through long-term agreements, they supply electricity at a much lower figure to many industrialists working in Europe? Is there not a massive subsidy to industry in Europe? Are there not many companies with bases in this country and Europe which obtain electricity at a cheaper rate by using that method to get around the advertised tariffs?

Mr. Goodlad: The French tariff is lower because, broadly speaking, it has a larger nuclear element. The electricity supply industry in Britain is currently considering proposals for successors to the present load management schemes, including the contracted consumer load scheme, which formally expires in March 1985. I


understand that the Electricity Council intends that the new arrangements should, overall, be no less beneficial than the present schemes.

Oral Answers to Questions — HOUSE OF COMMONS

Palace of Westminster (Bedrooms)

Mr. Greenway: asked the Lord Privy Seal how many bedrooms there are in the Palace of Westminster today compared with 30 years ago; how they are allocated; and if he will make a statement.

The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): There are 42 bedrooms in the Palace of Westminster, which compares with 38 bedrooms 30 years ago. These rooms are used by those occupying official residences and by staff of the House whose duties may require the provision of overnight accommodation.

Mr. Greenway: Will my right hon. Friend bear in mind the problems of some elderly and unfit Members of Parliament—[H0N. MEMBERS: "Name them."]. It would be unfair at Christmas to name them. Such hon. Members have problems getting to the Division Lobbies from their distant offices in the eight minutes allowed. Will my right hon. Friend consider giving priority to finding offices for hon. Members within the precincts of the House? Will he switch the bedrooms from the House to the distant offices vacated by hon. Members?

Mr. Biffen: My hon. Friend's question became more uncharitable as it proceeded. In the execution of the Bridge street project, it is hoped that it will be possible to shift some staff from the Palace of Westminster and that accommodation can then be made available to hon. Members. Of course, such allocation and the criteria for it are matters for the Accommodation and Administration Sub-Committee.

Mr. Beith: Is not one of the bedrooms occupied by the Lord Chancellor? Does he not sleep more easily in his bed than he should because he does not have the scrutiny of a Select Committee of this House over his Department, as do all other Ministers? Should not his slumber be made uneasy like that of other Ministers?

Mr. Biffen: I suspect that the premise of the question is wrong, and therefore it would not be appropriate for me to comment on the conclusion.

Public Gallery (Access)

Mr. Wareing: asked the Lord Privy Seal if he will make a statement on the provision of access for blind people with guide dogs to the House of Commons Public Gallery.

Mr. Biffen: I refer the hon. Member to the reply that I gave to my hon. Friend the Member for Exeter (Mr. Hannam) on 2 July.

Mr. Wareing: I have not seen that reply. Is the right hon. Gentleman satisfied that the facilities for blind people with their guide dogs are equivalent to those in the other place, where I understand Black Rod has a considerable element of discretion? Will he carefully monitor the position in the House of Commons Public Gallery? Will he consider the possibility of giving the Serjeant at Arms like discretion?

Mr. Biffen: The hon. Gentleman may be interested to know that an identical number of blind persons with dogs may attend the Strangers Gallery in the House of Lords as obtains in the House of Commons. In my answer to my hon. Friend the Member for Exeter I said that two places in the Gallery had been provided for blind persons with guide dogs. Since that arrangement was made six months ago, a place has been taken by a blind person with a guide dog on only one occasion. The visitor pronounced himself well satisfied.

Mr. Hayes: Given the difficulty that the blind seem to be having in gaining access to the Public Galleries, does my right hon. Friend not feel it outrageous that convicted terrorists are gaining access to Committee Rooms?

Mr. Speaker: Order. That has nothing to do with the question.

Mr. Pavitt: The Lord Privy Seal will recall that recently, following a debate on the blindness allowance, there were at least six blind persons present with their guide dogs. Will he consider ensuring that there is flexibility on certain occasions, which will enable him to give instructions to the Serjeant at Arms to increase the number of those permitted in with guide dogs?

Mr. Biffen: Certainly. I am sure that the appropriate Committee will be happy to consider that. Since the establishment of special places in the Galleries for the blind and their guide dogs, the facility has been used to the extent that admission has always been possible.

Mr. Hayward: Is it not the position that the Department of the Serjeant at Arms operates the provisions and facilities for the blind and other disabled with a great deal of flexibility when requests are made of it? Last week I brought a disabled person into the House and received all the help that I needed from the Department.

Mr. Biffen: I am certain that that is so and I am grateful to my hon. Friend for making the point. It enables me to say that the facilities that can be offered and supervised by the Serjeant at Arms are always that much better if lobbyists inform him in advance of their proposals.

Mr. Boyes: In considering the problems of the handicapped and the disabled, will the Leader of the House inform us whether a sign language interpreter for the deaf is permanently employed in the House? If not, will he be prepared to consider whether one should be so employed?

Mr. Biffen: I shall have that proposal investigated.

Oral Answers to Questions — ENERGY

Selby Coalfield

Mr. Eggar: asked the Secretary of State for Energy if the current miners' strike has led to delays and cost overruns in the development of the Selby coalfield.

Mr. David Hunt: The total investment programme of the National Coal Board had been planned at £800 million for this year. The current strike has, however, halted work on many of the NCB's projects, including Selby, to the detriment of the industry's future.

Mr. Eggar: Was not the Selby development a signal to the entire coal mining industry that the Government


were committed to the future of coal mining? Was it not a severe blow when the National Union of Mineworkers decided to go ahead with picketing to stop development of this extremely important coalfield? Is there nothing that my hon. Friend can do to try to assist in getting more miners back to work so that development can continue at Selby despite the NUM's actions?

Mr. Hunt: I agree with my hon. Friend that everything possible must be done. Since 1979 the Government have invested £3·9 billion in the coal industry. That investment is nearly 50 per cent. higher in real terms than investment in the previous five years by the Labour Government.

Mr. Heffer: As the amount of coal which the Government projected would be mined will not be reached because of the dispute, is it not time that the Government stopped intervening on the side of the Coal Board and took a step in intervening to achieve a settlement of the dispute, as has been asked for by Opposition Members? Given the Secretary of State's statement that there should be no negotiations, is not Mr. Scargill right in saying that the only way forward is industrial action by the rest of the working-class movement?

Mr. Hunt: It was noticeable that when the hon. Gentleman said that Mr. Scargill was right there was not one note of agreement throughout the Chamber.

Mr. Nellist: Yes, there was.

Mr. Hunt: The hon. Gentleman was asleep. It is a fact that before the industrial action started our great coal industry had tremendous potential, but that is being lost every day that the dispute continues.

Mr. Rowe: Is there not a real danger that the longer the strike continues the more Mr. Scargill's gloomier predictions will become self-fulfulling? What steps is my hon. Friend taking to ensure that when the strike comes to an end the damage that has been inflicted on the coal industry is laid at the door of those responsible?

Mr. Hunt: I agree with my hon. Friend. All Ministers at the Department of Energy are anxious to start on the rebuilding process. Since the beginning of the dispute, not only have 23 production faces had to be abandoned, but 13 salvage faces as well. In addition, 19 faces are giving cause for serious concern, and a further 65 faces are causing concern. It is a tradegy that the NUM is putting at risk those pits which its leaders claim they are fighting to save.

Mr. Foster: The Under-Secretary of State continues to plead how tragic it is for the industry that this dispute is continuing, and the hon. Member for Enfield, North (Mr. Eggar) is alarmed about the implications for Selby. If Tory Members are so worried about damage caused to the industry, why do they not lift a finger and get the people involved around the table to solve the dispute? Is the Secretary of State aware that he is profoundly mistaken if he believes that there is any political profit to be had in humiliating the miners and destroying mining communities?

Mr. Hunt: The solution to this dispute lay with a ballot held at the start of the dispute, in accordance with the long-established, democratic tradition of the NUM. If a ballot had been held, there would have been no need for these mass pickets, intimidation and violence. Not one miner

would have gone to work. The sad fact is that the only way to end this dispute is for miners to vote with their feet and return to work.

Oral Answers to Questions — CIVIL SERVICE

Northern Region (Job Transfers)

Mr Dormand: asked the Minister for the Civil Service what are the number of Civil Service posts transferred to the northern region since May 1979.

The Minister of State, Treasury (Mr. Barney Hayhoe): As I last told the hon. Gentleman on 20 November, the dispersal programme announced on 26 July 1979 did not include any transfer of posts to the northern region. Details of posts that may have been transferred by Departments for management reasons are not held centrally.

Mr. Dormand: Is the Minister aware that people in the north are sick and tired of seeing the Government shed crocodile tears over unemployment in the region? Here is a matter on which the Government can take direct action, and in nearly six years they have done absolutely nothing. The Government have actually transferred Civil Service jobs from the northern region to other parts of the country. In view of what the Minister said today, can we ever expect a change of policy in this matter?

Mr. Hayhoe: The dispersal programme, which was announced on 26 July, is being followed through. I can hold out no hope to the hon. Gentleman that a new dispersal policy will be brought before the House.

Administrative Grades (Recruitment)

Mr. Chapman: asked the Minister for the Civil Service what initiatives he is taking to encourage scientists and engineers to be recruited, at least for limited periods, into the administrative grades of the Civil Service.

Mr. Hayhoe: Recruitment into administrative posts in the Civil Service is open to people from all disciplines and we seek through publicity and university visits to bring this fact to the attention of all potential recruits, including scientists and technologists. A total of 17 per cent. of successful candidates for administration trainee in 1984 had a scientific or technological background, compared to 11 per cent. in 1983.

Mr. Chapman: I am grateful to my hon. Friend for giving that information. While recognising the importance of attracting scientists and engineers into the administrative grades of the Civil Service, may I ask my hon. Friend to consider sympathetically the possibility of extending the unified grading approach to new entrants from the professions, as I am sure he will agree that that is the best and most effective initiative that we could take to attract such people into the Civil Service?

Mr. Hayhoe: I certainly support the concept of extending unified grading, and discussions are occurring to extend it down to principal level. I hope that those discussions will be completed soon. I am sure that that extension will have an encouraging effect on the outlook of engineers, technologists and scientists in the Civil Service.

Mr. Eastham: Is it not almost criminal that we are to recruit engineers and scientists into administration when


it costs many thousands of pounds to train those specialists? Is the Minister aware that, recently, a Select Committee on which I served was advised of grave shortages of some of those scientists, such as the shortages to which reference was made this afternoon?

Mr. Hayhoe: As one of the few chartered engineers in the House, I can say to the hon. Gentleman that I believe that people with such professional skills should be employed in the highest ranks of the Civil Service. Many of the matters with which the Civil Service deals and about which advice must be given to Ministers involves engineering, technological and scientific aspects. It is highly desirable that some of the people giving that advice should have been trained in those disciplines.

Delegation of Authority

Mr. Eggar: asked the Minister for the Civil Service if he is satisfied with the level of delegation of authority within the Civil Service.

Mr. Hayhoe: The central Departments have already delegated a wide range of authorities to spending Departments, while maintaining where necessary common standards and rules across the Civil Service, and Departments in turn delegate a good deal to line managers. More delegation is needed and this is one of the aims of the changes in management under way in the Civil Service.

Mr. Eggar: Has not the record of delegation of authority within Deparments, rather than within the centre, been somewhat disappointing despite the fact that the financial management initiative drew attention to the need for delegation? Has my hon. Friend noted that the new report from the efficiency unit draws attention to that? Will he assure the House that he will lead a drive to ensure that Departments follow the recommendations of the efficiency unit?

Mr. Hayhoe: My hon. Friend, as so often on such matters, is right in what he says. We want to see more delegation. Delegation and accountability go together. We want to see that being extended. The financial management initiative has that as one of its main objectives. I shall do all that I can to facilitate progress on that initiative.

Trade Union Discussions

Mr. Soley: asked the Minister for the Civil Service when he last met representatives of the Civil Service trade unions; and what was discussed.

Mr. Hayhoe: I met the Civil Service unions on 4 December to discuss the Government's decisions on the 1984 report of the Top Salaries Review Body. The unions also took the opportunity to discuss with me some recent changes in travel and subsistence provisions.

Mr. Soley: Did the Minister take that opportunity to raise the subject of the review of VAT offices? Has he anything to say about the proposal to close 30 of them, in view of the Government's plan to increase VAT on some commodities—on newspapers, books and so on? What implication does that have for staffing? Will he make a statement on that subject to the trade unions?

Mr. Hayhoe: VAT was not discussed at my last meeting, which was with the Council of Civil Service

Unions. Nor was it discussed at an earlier meeting that I held with union representatives from Customs and Excise. At that time they were raising matters about the customs part of the general responsibility of Customs and Excise.

Dr. McDonald: Is the Minister aware that in the pay negotiations going on at GCHQ, of the five members of the staff side three still retain their trade union membership? Does that not show the absurdity of the Government's ban on trade union membership there?

Mr. Hayhoe: No. What it does show is that the hon. Lady is relying upon a recent, inaccurate report in the Financial Times.

Oral Answers to Questions — ENERGY

Electricity Prices (Landlords)

Mr. Greenway: asked the Secretary of State for Energy if he will make a further statement on the practice of some landlords in pricing electricity to tenants above the rate they are required to pay themselves; and if he will make a statement.

Mr. Goodlad: The Office of Fair Trading is currently considering the comments received on the consultative document which it issued earlier this year and expects to report its findings to Ministers in the new year.

Mr. Greenway: Does my hon. Friend agree with me, without prejudging what the report says, that it is wrong for some landlords to charge their tenants double, or even more, for the price of energy than they themselves have to pay? When he sees the report, will he introduce legislation to make that impossible?

Mr. Goodlad: I am aware of the close interest that my hon. Friend has taken in this matter. Existing legislation provides that area boards shall set maximum permitted prices for the resale of electricity. Landlords may resell at that higher price to recoup their additional costs. The Office of Fair Trading reviewed the problems associated with the resale of electricity between 1974 and 1977. It was concluded that there was insufficient evidence to justify recommending changes in legislation. I should not wish to anticipate the findings of the present review or the Government's response to it.

Coal Industry Dispute

Mr. Nellist: asked the Secretary of State for Energy if he will make a statement on the coal strike.

Mr. Peter Walker: I refer the hon. Gentleman to the reply that I gave to the hon. Member for Cannock and Burntwood (Mr. Howarth).

Mr. Nellist: Following the Under-Secretary's remarks about Selby coalfield, does the Secretary of State recognise that that coalfield, producing 10 million tonnes of coal, with 4,000 miners, is designed to replace equivalent production from 21 pits in the north Yorkshire area, which used to employ 16,000 men? Is not one of the central issues that fuels the anger of the miners the development of super pits such as Selby, and in areas of Oxfordshire, Warwickshire and so on, which is a preparation for future privatisation? It shows that the Government are less concerned about the continuation of jobs in communities and more concerned about lining the pockets of their big business mates.

Mr. Walker: It is remarkable that the hon. Gentleman should argue about the development of pits such as Selby, when a predecessor of mine in a Labour Government boasted of the enormous contributions made by Labour Governments towards Selby's development. The reason for the dispute is nothing to do with the development of Selby, which is in the interests of the coal industry. The leader of the NUM — I gather from the tapes — is reported to have repeated his demand at the meeting with the TUC this morning and informed it that the NUM is not

prepared to allow the closure of any section of the industry, however small. That is in sharp contrast to what happened under all previous Labour Governments.

Mr. Lawrence: On a point of order, Mr. Speaker.

Mr. Speaker: Does the point of order arise directly out of questions?

Mr. Lawrence: No.

Mr. Speaker: I shall take the point of order later, then.

Banking Supervision

The Chancellor of the Exchequer (Mr. Nigel Lawson): With permission, Mr. Speaker, I wish to make a statement about banking supervisory arrangements, in the light of the recent problems at Johnson Matthey Bankers Ltd.
I have now considered with the Governor of the Bank of England the events leading up to the rescue operation conducted by the bank on 1 October. It is clear that the case raises important issues about our present procedures of banking supervision, and the legislative framework within which it is conducted.
The Governor and I have therefore agreed to a full review of the present supervisory arrangements, and to consider whether any early changes in present supervisory procedures are needed. Issues to which particular attention will be given are the relationship between auditors and supervisors, staff experience and training, the handling of concentrations of risk and the assessment of quality of assets, notification and collection of statistics, and the adequacy and deployment of staff resources in the banking supervision department of the Bank of England. The review will also consider whether a more effective framework is required than that provided by the Banking Act 1979. I shall be placing a copy of the full terms of reference of the review in the House Library.
I shall, of course, inform the House as early as possible of the results of the review, including any legislative changes that I consider necessary.

Mr. Roy Hattersley: The most significant fact about the statement is that the Government felt the sudden necessity, after 10 weeks, to go on record about the Johnson Matthey affair. No doubt the Chancellor believes that his message will be blandly reassuring, but the nature of the statement, and the fact that the right hon. Gentleman needed to make it today, will, I suspect, intensify rather than allay fears.
The City of London has been anxious about the matter for the past two months. Can the Chancellor tell us why it took that period of time before he was able to make a statement, in the House or elsewhere, about the changes that he regards as necessary? Has the delay been in part the product of the widely reported disagreements between the Bank of England and the Treasury about how the matter was disposed of? Can the Chancellor tell us whether he personally supports the view that the Bank should have virtually nationalised Johnson Matthey at 9.30 pm one Sunday evening? As well as telling us his view on the general principle underlying that disturbing pattern of events, will the right hon. Gentleman answer four questions, even in advance of the review which he has promised and which we shall no doubt debate?
First, will the review include a thoroughgoing examination of the Banking Act 1979 specifically to deal with the problems of early warning and whether the bank and the Government get sufficient warning in time about incipient collapse; whether the Act provides sufficient supervision in its quasi-voluntary form, or whether some sterner regulation is necessary?
Secondly, may we be told the relationship to the affair of Price Waterhouse and Co., and whether the Chancellor

thinks that this firm of accountants is spreading its activities too widely across the entire economy of the United Kingdom?
Thirdly, may we be told about a second firm of accountants — Arthur Young McClelland Moores and Co.—the auditors, which gave the company a clean bill of health as recently as the middle of June last year? We hear that that firm of accountants is likely to be investigated by the standards body of its profession. Is that true?
Fourthly, the Governor of the Bank of England is on record as saying that institutions should stand or fall according to their own performance. Does that rule apply to companies within the City of London, or does it apply only to manufacturing industries, which are allowed to fall by the Government, thereby causing large-scale unemployment?

Mr. Lawson: The right hon. Gentleman asked whether there would be a thoroughgoing examination of the Labour Government's Banking Act 1979. As I have said, in so far as the provisions of that Act are relevant—and many of them are—they will be very much at the heart of the inquiry. I do not want to prejudge the results of the inquiry, but it may well be that it will be necessary to introduce certain amendments to the Banking Act. However, we shall have to await the results of the inquiry.
Price Waterhouse has little, if anything, to do with the case. As the right hon. Gentleman said, the auditors are Arthur Young McClelland Moores and Co. As I said in my statement, the relationship with the auditors and, indeed, the general relationship between auditors of banks and the supervisory authority, are extremely germane and will be at the centre of the inquiry. As to whether firms stand or fall by their results, the shareholders of Johnson Matthey, the parent company, of which Johnson Matthey Bankers is a wholly-owned subsidiary, have lost three quarters of their money — some £¼ billion — and the entire top management, from the chairman downwards, have been obliged to resign. That, I think, answers the right hon. Gentleman's question.
It comes rich from the right hon. Gentleman to ask why it has taken me so long to come to a considered judgment on the best way of investigating banking supervision, because until I announced that I would make a statement today he had not asked one question about this matter.

Mr. Terence Higgins: The House, particularly the Treasury and Civil Service Committee, will need to consider carefully what my right hon. Friend has said, in the light of the document to which he referred. Has he any views on the likely timing of the inquiry? When it is completed, will it be presented to the House as a Green Paper or in some other way?

Mr. Lawson: Given that this is a highly complex matter, it is difficult at this stage to say how long the inquiry will take, but it will be completed as soon as possible. As to how the results are reported to the House, I shall have to determine that in the light of the inquiry, which will go into matters of very great commercial confidentiality, including relationships between banks and their clients. I cannot yet say how I shall report to the House, but, as I said in my statement, I shall report the results of the inquiry, together with whatever action I think it proper to take.

Dr. David Owen: Does the Chancellor accept that his remarks are unsatisfactory? There is now a contingent liability on public funds of £75 million. This matter began with no liability on public funds, it went to £10 million, and many of us are wondering whether the figure will go above £75 million. Will the Chancellor reassure us on that point? Will he confirm that public money is involved, because if the public liability is taken up there will be a loss of dividends from the banking department to the Treasury?
Secondly, will the Chancellor reveal the extent of his own involvement? He told me in a letter that this was entirely the decision of the Governor of the Bank of England. The Governor told me that he had been consulted at all stages. I understand that Sir Peter Middleton was heavily involved in the early stages of the rescue. The Chancellor insisted that no public money should be involved. These are serious matters and very disturbing events in the City of London. To have a public inquiry or the kind of assurance from him for which his right hon. Friend the Member for Worthing (Mr. Higgins) has asked —that there should be revealed to this House the basis of this internal investigation—is the minimum that is needed. Above all, the Chancellor, who is very complacent about this affair, has a duty to say to the House whether any more public money is at risk other than the £75 million.

Mr Lawson: Far from being complacent, I have shown myself to be very concerned about what appeared to me to be possible weaknesses in the system of banking supervision in this country, which goes far beyond the issue which has brought the matter to light; namely, the collapse of Johnson Matthey Bankers Ltd. That is why I thought it right to have in inquiry into the adequacy of banking supervision in this country: both the way in which the existing system is operated, and whether it statutory framework needs to be improved. As to whether there should be an internal inquiry, or a public inquiry, because of the nature of the matter it is right that it should be an internal inquiry, which will involve not only the Bank of England but the Treasury and an independent consultant.
As for when I knew about it, the Governor notified me of the action which he intended to take shortly before the rescue was announced. As for the funds, my approval was neither sought nor required. Perhaps I might refer the right hon. Gentleman to an occasion when he was a Minister in a previous Labour Government. In the case of Slater Walker, my predecessor but one, the right hon. Gentleman's former colleague, the right hon. Member for Leeds, East (Mr. Healey), said when he was asked about it, inevitably by the hon. Member for Bolsover (Mr. Skinner):
I was aware of the general approach adopted by the Bank of England to the problems of the Slater Walker Group".
The right hon. Gentleman continued:
My specific approval of the standby loan facility and guarantee was neither sought nor required."—[Official Report, 13 October 1976; Vol. 917, c. 142–43.]
That is the relationship between the Bank of England and the Treasury and between the Governor and the Chancellor of the Exchequer. As for the resources which are at risk, these are not voted funds. They are the own resources of the Bank of England.

Mr. Peter Tapsell: Does my right hon. Friend agree that, with the ever-growing internationalisation of financial markets and the development of 24-hour markets, the supervisory role of all central banks is becoming increasingly more difficult to perform, and that, although it is important to try to achieve the most efficient legislative and codification arrangements possible, in the last resort these matters, which often have to be handled very quickly and in a situation of some crisis, depend for their successful resolution upon having men of great judgment and experience running the central banks and that whatever we do we should be careful not to reduce the role of the Bank of England to that of the Treasury's poodle?

Mr. Lawson: I agree with everything that my hon. Friend has said, but there is no question of the Bank of England being a Treasury poodle. At issue here is the adequacy of our banking supervisory arrangements, for which the Treasury clearly has responsibility. The Banking Act 1979, which is the statutory framework within which it is conducted, is an Act of Parliament for which there is Treasury responsibility. Therefore, it is necessary for the Treasury as well as the Bank of England to be involved in this inquiry.

Mr. Robert Sheldon: I, too, welcome the review which the Chancellor of the Exchequer has announced, but will he be more forthcoming about the liability of the Bank of England? This is an important matter. We are committing public money to the rescue of a bank, although similar amounts of public money are not being given to many worthy individuals or companies whose businesses have collapsed during the past five years. If there is to be sauce for the one, there must be sauce for the other. The right hon. Gentleman must tell us about the amounts of money involved, because those same amounts could have saved many jobs in many worthwhile industries all over the country.

Mr. Lawson: So far, the Bank of England has paid only £1 from the banking department's own resources. It is true that, beyond that, there is an indemnity, jointly between private sector banks and others and the Bank of England of £75 million each. It is far too soon to say how much of that indemnity will be required.
In making the comparisons which the right hon. Gentleman sought to make, he knows as well as I do, because he is a former Financial Secretary to the Treasury, that in every country in the world the central bank has a responsibility, as a lender of last resort, for the banking system. It has to decide in each case whether it is right for it to use that authority as a lender of last resort and, if so, in what way. It was the clear view of the Governor that there was a threat to the London gold market, which is a very important market for this country. That was a factor of which he had to take full cognisance.

Mr. Tim Smith: My right hon. Friend's announcement that the relationship between the auditors and the supervisory authority is to be the subject of a review is welcome, but can he tell us whether he has recommended to the Bank of England or others that the auditors in this case should be sued?

Mr. Lawson: I have made no such recommendation, but, leaving aside the question of litigation, when a


company becomes insolvent as rapidly as Johnson Matthey Bankers did, questions arise about the role of the company's auditors. The auditors signed off the company's accounts without qualification on 18 June of this year. Of course, beyond the particular case—the House might do well to concentrate on this—there is the question of the role of banks' auditors and the relationship between the auditors and the supervisory authority.

Mr. Stuart Bell: The House will be grateful to the Chancellor for mentioning, after 17 minutes, the London gold bullion market and for saying that it was involved in the considerations of the Governor of the Bank of England. Was not the lifeboat of the Bank of England launched to help speculators in the gold market rather than those who put their money into real wealth creation in industry in this country?

Mr. Lawson: That is not true. The case was one of a particular bank which got into serious trouble. As far as I am aware, it was a one-off case. The matter was complicated by the fact that the bank was wholly owned by a leading member of the bullion market.

Mr. Jonathan Aitken: Bearing in mind the fact that Johnson Matthey had such a pivotal position in the London bullion market, does my right hon. Friend agree that the Bank of England would have been right to try to rescue Johnson Matthey if it could have achieved, as its initial press release said it had achieved, a rescue in which there was no liability of public funds? Will my right hon. Friend address his mind to what has gone wrong between the original press statement of no liabilities and the present situation where we hear that there could be £75 million of liability of public funds? Where are the guilty men?

Mr. Lawson: I seem to have heard that last phrase somewhere before. My hon. Friend asks what has gone wrong. I think that what has gone wrong is that there is prima facie evidence of a weakness in the way that the banking supervisory system operates. That is precisely why I have set the review in motion.

Mr. Norman Atkinson: Is not the Chancellor's dilemma about whether to have a public inquiry into all aspects of the matter dominated by his desire to protect the reputations of leading personalities in the City and of some ex-hon. Members and current hon. Members?

Mr. Lawson: I have not the faintest idea to whom the hon. Gentleman is referring.

Mr. Anthony Beaumont-Dark: Does my right hon. Friend accept that most of us believe that he has acted entirely properly and with some circumspection before launching the inquiry? Does he agree that if we are to have full confidence in the inquiry, bearing in mind the responsibilities and supervisory role of the Bank of England, noble Lords in the upper House, who have great experience in these matters and who are Privy Councillors, should be included in the inquiry team? If that is done, all hon. Members can have confidence in the inquiry and the report that results from it.

Mr. Lawson: I am grateful to my hon. Friend for his initial remarks. I assure him that he can have complete confidence in the inquiry that I have set in motion.

Mr. Max Madden: Was the Chancellor surprised at the collapse of Johnson Matthey in the buoyant enterprise society in which he keeps telling us we live, and at the disinclination of private interests to rescue the bank, which would have been an alternative to having recourse to the Bank of England and public funds?

Mr. Lawson: It is wrong to say that the private sector was unwilling to come forward. It provided a substantial sum. In addition to the initial sum that was invested, especially by Charter Consolidated, the private sector has invested 50–50 with the Bank of England in the £150 million indemnity.

Mr. Hugh Dykes: Is my right hon. Friend not aware that public anxiety on these occasions is always about the phrase "internal inquiry"? To avoid good old-fashioned City magic circle-ism in this extremely disturbing story, will he assure us that the inquiry will be fully publicised, properly set up and will include eminent people, who may come from the upper House, as my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) suggested?

Mr. Lawson: I am sure that my hon. Friend, who earns his living in the City, as well as in Parliament, will understand that matters of high commercial confidentiality are involved, such as the relationship between the bank and its clients. It would not, therefore, be appropriate for this to be a public inquiry. I have made my concern clear to the House by having a full review of the workings of the existing system and of whether the system should be improved. I shall report my conclusions fully to the House. If legislative changes are required, the House will have the fullest opportunity to debate them.

Mr. Jack Straw: Does the Chancellor accept that his weasel words cannot disguise the extraordinary fact that the Government, who believe in the magic of the market, nationalised for £1 an uneconomic bank late one Sunday evening? Does he agree that that shows that the Government have one law for uneconomic banks and another law for uneconomic pits and factories?
When the right hon. Gentleman speaks about a serious failure of supervision, does that not raise questions, which were hinted at by the hon. Member for East Lindsey (Mr. Tapsell), about the Governor of the Bank of England, whose qualifications were questioned by the Labour party and by many leading figures in the City when he was appointed?
Finally,—

Mr. Tapsell: There is no such implication.

Mr. Speaker: Order. Although the hon. Member for Blackburn (Mr. Straw) is a Front-Bench spokesman, he should ask one question only, as other hon. Members do.

Mr. Lawson: I hope that the hon. Gentleman, who will have heard the comment of my hon. Friend the Member for East Lindsey (Mr. Tapsell) that there is no such imputation about the Governor of the Bank of England, who is a distinguished banker, will withdraw his remark.

Mr. Tim Eggar: I welcome the review. For the benefit of ignorant Opposition Members, will my right hon. Friend make it clear that the Johnson Matthey group employs a large number of people in manufacturing industry and that the prompt action of the Bank of England safeguarded their jobs?

Mr. Lawson: That is absolutely right. The Johnson Matthey group has a gold refining business, various other manufacturing businesses and employs many people, some of whom, if I am not mistaken, are in my hon. Friend's constituency.

Mr. Ian Wrigglesworth: Does the Chancellor agree that, in view of the seriousness of the matter, it is inadequate that there is no independent element in the review that he has announced? Does he further agree that it is incorrect that those who were partly responsible for the collapse should inquire into themselves? Does it not reflect badly upon the Bank of England that it has implemented inadequately the legislation that has been passed during the past four years?

Mr. Lawson: I do not accept what the hon. Gentleman says. The inquiry will be a joint one between the Bank of England, which is the supervising authority, and the Treasury. The Treasury will be fully involved. An independent consultant experienced in banking will also be involved. That consultant has not yet been appointed.

Mr. Harry Cohen: If the Chancellor can give £75 million from public funds to bail out Johnson Matthey, do not his friends in the City think that with this Government it is Christmas all the year round? If he can provide such money out of public funds for them, why can he not waive VAT on the Band Aid record so that that money can be used to relieve the famine in Ethiopia?

Mr. Lawson: I have given no money, and no taxpayers' money is involved in this. The hon. Gentleman mentioned an important factor. Because the Governor of the Bank of England decided to intervene in this case, under his authority and using the resources of the banking department of the Bank of England, it does not follow that he would do so in any other case, were one to arise.

Mr. D. N. Campbell-Savours: Is it not true that an investigation of Johnson Matthey's accounts has shown that half of the loan portfolio was in risky ventures to which it should never have lent money? Is it not also true that that information was relayed to the Bank of England 12 months ago? May we therefore presume that that information was also relayed to the Chancellor about 12 months ago? Does the right hon. Gentleman deny that he knew 12 months in advance of the possibility that the bank would fail in the way that it has and that the Exchequer would be required to pick up the bill in the form of a £70 million indemnity?

Mr. Lawson: First, the Exchequer has not picked up the bill. Secondly, of course I did not have the knowledge to which the hon. Gentleman referred. All these matters, including the loan book of Johnson Matthey bankers, will be germane to the general review into the adequacy of the present banking supervisory arrangements.

Mr. Hattersley: The Chancellor is clearly foolish to pretend that the £75 million, which may technically be a matter for the Bank of England, is not a charge on public

funds. It is clearly money which, were it not used for this purpose, might be used for far more desirable purposes. The Chancellor makes a technical, and therefore false, distinction between the two.
Perhaps the Chancellor will clear up some of the added confusion that he has caused. He said that he did not understand my reference to Price Waterhouse and Co. I may be wrong, but I understand that it was the firm of accountants asked by the Government to consider the company's business. When did it become involved? Was it involved when the problem seemed much less serious that it does 10 weeks after the collapse?
Secondly, have any attempts been made to ensure that the risks that may be involved and any money that may be required will properly be debted to the parent company of Johnson Matthey, which I understand is not regarded by the Bank of England as being responsible for the potential debt?
Thirdly, and most importantly, may I ask the Chancellor again a question which he has so far not attempted to answer concerning his attitude to the affair. He said that he was told about the arrangement shortly before the public announcement. He was clearly not consulted, but was informed that it was happening. The House should know whether the Chancellor approves of the rescue in this case. If he approves of this rescue, there will be many more desirable rescues of which the House will expect him to approve.

Mr. Lawson: On the last point, I have made clear, my approval was neither sought nor required. I was informed of the position shortly before the announcement was made in what has become the conventional way, and obviously there was no time for me to consider the full details of the matter then. Price Waterhouse and Co. was asked by the Bank of England to conduct a quick examination of Johnson Matthey's accounts at a late stage, but before the rescue, when the Bank of England had serious doubts about the state of Johnson Matthey's loan book.
I am sorry, but I have forgotten the right hon. Gentleman's third question.

Mr. Hattersley: It was about the involvement of the parent company, which I understand—the Chancellor will correct me if I am wrong—may not be responsible for the debt and for the rescue operation costs which the Bank of England has underwritten.

Mr. Lawson: I have already made it clear that the parent company has lost its entire investment in Johnson Matthey Bankers. The top management, from the chairman downwards, have been obliged to resign and the company now has a market capitalisation of £90 million, which is after some injection of cash from Charter Consolidated, having had a market capitalisation of £320 million before the rescue operation.

Mr. Hattersley: rose—

Mr. Speaker: Order. We have an important private Members' day today.

BILL PRESENTED

TRUSTEE SAVINGS BANKS

Mr. Chancellor of the Exchequer, supported by Mr. Peter Rees, Mr. Giles Shaw, Mr. John Moore, Mr. Barney Hayhoe, Mr. Ian Stewart, Dr. Rhodes Boyson, Mr. Allan Stew art and Mr. Alex Fletcher, presented a Bill to make provision for the purposes of or in connection with the reorganisation into companies incorporated under the Companies Acts of the institutions regulated by or existing under the Trustee Savings Banks Act 1981 and for the treatment for the purposes of the Banking Act 1979 of any Scottish savings bank established before 28th July 1983 which has not since become a trustee savings bank: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 45].

Statutory Instruments

Mr. Speaker: By leave of the House, I shall put together the Questions on the four motions relating to statutory instruments.

Ordered,
That the Sale of Optical Appliances Order of Council 1984 (S.I., No. 1778) be referred to a Standing Committee of Statutory Instruments. &amp;c.
That the Agriculture and Horticulture Grant (Variation) (No. 2) Scheme 1984 (S.I. 1984, No. 1923) be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Dangerous Substances and Preparations (Safety) (Amendments) Regulations 1985 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Novelties (Safety) (Amendment) Regulations 1985 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Archie Hamilton.]

British Shipping Industry

Mr. Michael Colvin: I beg to move,
That this House recognises that the shipping industry is not only of great importance to the United Kingdom's trade and commerce, but also to the United Kingdom's defence needs and North Atlantic Treaty Organisation commitment; notes with concern the decline of the British merchant fleet in terms of tonnage and share of world markets; and asks Her Majesty's Government to state its policies for helping the industry to improve its international competitive position.
Both the constituencies that I have had the honour to represent have strong maritime connections, and that is one reason for choosing the state of our Merchant Navy as the subject for my private Member's motion. The other is that since the Conservative Government took power in 1979 there has been no opportunity, in either Government or Opposition time, for a general debate on an industry which is crucial to this country's economic prosperity and its strategic defence.
It is true that we have had Adjournment debates about the Merchant Navy, and I pay tribute to the hon. Member for Kingston upon Hull, East (Mr. Prescott), who had an Adjournment debate on this subject in March 1983. I am sure that the House will also applaud my right hon. Friend the Member for Taunton (Mr. du Cann) for initiating his Adjournment debate on the Merchant Navy in October 1982, for the general way in which he has spoken up on behalf of the merchant shipping industry and for the way in which he drew attention to the state of our merchant fleet during the recent debate on the Royal Navy. The House will also salute my right hon. Friend the Member for Taunton for taking over the chairmanship of the all-party merchant shipping group, which has just come into being, and not a moment too soon.
I am afraid that apart from those debates and occasional "quickies" on small matters of shipping legislation, the Finance Bills have offered the best opportunities to say things about shipping. Perhaps that underlines the importance of fiscal policy for this vital industry. It is a pity that all the Treasury Ministers who were here a moment ago, and to whom many of our remarks this afternoon will be directed, are not here to listen to this debate.
The debate is necessary because the British merchant fleet, in spite of being one of the world's most modern and efficient, is declining at the rate of about two ships per week, which could nearly extinguish it by the end of the decade. Cruise ships and ferries may be doing all right, but by the year 2000 we may have a fleet which consists only of cruise ships and ferries, and that would not be good enough for our trading position. As recently as 1966 our fleet was the largest in the world, representing 12.5 per cent. of world tonnage.
When I first went to Bristol as a candidate in 1975, our merchant fleet was still at an all-time, but somewhat exceptional, peak. However, our position in the international league table was then already beginning to slip because our overseas rivals, often with massive state aid, were outgrowing us and adding to the excessive world tonnage. For the last decade the gap between available tonnage and cargoes has been steadily widening. Symbolic of the mounting shipping surplus is the fact that two of the


earliest ships which I saw use the new Royal Portbury dock in Bristol, which were recently launched OCL container ships, were laid up because there was no demand.
As I look out from the Waterside part of my constituency across the Solent, I see the horizon blanked off by the huge hulk of the Burma Endeavour standing idle in Southampton, not on account of the industrial dispute in the docks, although there is plenty of that, with dockers determined to scuttle the port of Southampton, their jobs and the jobs of many of my constituents who are working in the dock-related services, but because there is no economic demand for its 500,000 tonnes oil-carrying capacity. It is cheaper for BP to pay £1 million a year in wages, maintenance and mooring fees to keep her idle in dock.
Therefore, I hope that today I can, first, convince the House that Britain needs the Merchant Navy. Secondly, I shall explain why our share in world shipping is down to 3 per cent. and still falling fast. Thirdly, I shall try to suggest what we should be doing to halt and perhaps reverse this dangerous downward trend.
Why do we need a Merchant Navy? In answer to that question I shall quote from a pamphlet entitled "British Shipping—the Right Course", of which I am the joint author with Mr. Jonathan Marks, a shipbroker, a good Tory and one day, I hope, a Member of Parliament. In the introduction to the pamphlet we said:
Britain's economic prosperity depends on our success in international trade. It generates a third of our national income and employs a corresponding part of our workforce.
As a major exporting and importing nation, it is essential for us to have free access to world markets to sell our goods and services.
It is equally vital to be able to purchase raw materials and finished products abroad.
We need the freedom to invest overseas and to attract foreign capital into Britain.
No other leading industrialised country has so clear a stake in open trading markets.
The prosperity of our country rests upon this foundation.
Our shipping industry is of critical importance in sustaining Britain's competitive performance in these world markets. The comparative advantages which a British-owned and registered fleet once enjoyed have made it one of the largest national flags and made a major contribution to our overseas earnings. Even now, an industry which employs more than 45,000 officers, ratings and cadets on about 800 vessels, which earns about £3.5 billion per annum and which in total contributes a surplus of £1 billion to the balance of payments each year is clearly vital to our economy. Threats to its prosperity constitute a danger to our long-term interests.
Our shipping industry is now in a state of crisis. The advantages which we once enjoyed in supplying shipping services have long since ebbed away and our fleet has shrunk accordingly. The world recession has compounded our problems. It has cut British shipping traffic with disproportionate severity. It has been argued that if our fleet continued to decline at the present rate it would be impossible to mount another Falklands expedition and could cast doubt on our ability to fulfil our NATO commitments.
While this has been happening, we have seen the growth of unfair competition. We have seen Governments in developing countries build up their fleets. We have seen moves by our overseas competitors towards protectionism

and even more state subsidies. We have seen the massive growth of the Comecon fleet, which, as well as being part of the Soviet Union's naval might, is in a position to wage economic war on this country. Nor should we forget that it is our maritime tradition that helps to make the City of London what it is. Sink our merchant fleet and untold damage will be done to the maritime service industries such as insurance and the Baltic Exchange, ship forwarders and travel agents which today provide worldwide services to shipowners everywhere. They are very important, too.
There are many reasons why we need a merchant fleet, and it is important and appropriate to mention at this stage three independent organisations which think likewise—the Nautical Institute, the Greenwich Forum and the British Maritime League—and pay tribute to the work that they have done and are doing to broaden and to deepen the debate on merchant shipping.
It is not surprising that voices have been raised within and without the shipping industry calling for drastic action to prevent a further decline of our fleet. One purpose of this debate is to ask the Government what they are doing to bring forward maritime policies which will halt and reverse that downward trend.
Before looking for remedies, it is important to examine the reasons for the decline. There has been no shortage of analyses, but diagnosing the ill is very much easier than prescribing a cure.
The British Maritime League has completed the most recent in-depth study in response to a request from my hon. Friend the Parliamentary Under-Secretary of State. The league rightly concludes that the main underlying cause of our fleet's decline is the impractibility of trading fairly in a market which is no longer governed by economics alone. Our competitors will do anything to survive when far too many ships are chasing far too little cargo. I know that it is a clichè, but it is the old case of Britain playing cricket while the rest of the world perform karate.
More specifically, the causes of the decline of our fleet can be either international, over which we have no direct control, or national, over which Britain — the Government or the shipowners or the unions — have some significant influence. The causes also apply either generally to the whole of the British merchant fleet or to particular sections of it.
Internationally, the world recession has reduced the demand for seaborne trade, and the debts of many developing countries and also the Comecon countries have put a high priority on acquiring foreign exchange. Our trade with Europe has grown at the expense of long-haul trade. Shipping requirements have been grossly overestimated by Governments, shipowners and banks. There were, for example, too many tankers in the early 1970s before the oil crisis, and too many bulk carriers in the late 1970s. The growth in protectionism is both national and international and includes national subsidies, direct and indirect, national flag discrimination or preference, national Government interference in conferences, multilateral and bilateral financial aid to developing countries for shipping projects and, of course, the UNCTAD 40–40–20 liner code for freight. More efficient ships have been introduced. There has been a growth in competition from flags of convenience, with lower taxation, minimal regulation, lower crew costs and, in some cases, less costly safety standards.
Another international cause for the decline of our cargo liner fleet is the development of the Trans-Siberian railway, which is now taking an increasing share—nearly 30 per cent. —of the trade between Europe and the far east.
Further threats to our liners are, first, the growth of the massive Taiwanese Evergreen and United States lines' fleets, which will be operating round-the-world container services outside the conferences; secondly, the increased practice of cargo reservation by countries such as Latin America, India and Sri Lanka; and, thirdly, reserved cabotage exercised in various forms by France, West Germany, Greece, Spain, Italy, all the Comecon countries, the United States, Canada, Australia, Japan, Finland, India — at least we can beat the Indians at cricket, even if we cannot beat them at shipping —Panama and most countries in south America and southeast Asia. The list is a very impressive one —[Interruption.] I am glad to see the hon. Member for Kingston upon Hull, East here now. I was paying credit to him earlier in my remarks.
To sum up, it is a very inhospitable and unfair market in which British shipowners have to compete, and we cannot afford to have any self-imposed handicaps. I know that it is dangerous to generalise, but it is nevertheless true to say that shipowners, both British and foreign, choose to fly the Red Duster because of the fiscal policies and tax regimes of successive Governments, and they have registered elsewhere—or "flagged out" as it is called—because of excessive operating costs, particularly crew costs. Until recently there were extreme cases where British crews were twice as expensive as Chinese crews, not only because of wage levels, but because of the related welfare payments — the so-called social wage which owners have to meet. British ships also tended to be overmanned, and it is greatly to the credit of the seamen's unions that at least on new ships our manning levels are now comparable internationally.
I cannot be as complimentary about the Government. Until recently our fiscal policies and tax regimes were an incentive to "flag in". Now it is quite the reverse. In his 1984 Budget my right hon. Friend the Chancellor of the Exchequer did his best to torpedo what was left of the British-registered fleet. Apart from adding to crew costs by removing overseas tax relief, he ended the 100 per cent. first-year allowance coupled with free depreciation. Admittedly, thanks to some tough talking during the passage of the Finance Bill, the Government recognised that shipping was a special case and introduced instead free depreciation on a 25 per cent. writing-down allowance, but this is thought by shipowners to be totally inadequate when compared with what other western European Governments are doing to increase their financial support for their shipping. The Red Duster is now being put at a competitive disavantage against nearly every other fleet.
With due respect to my hon. Friend the Parliamentary Under-Secretary of State, I think that there is a very good case to have the debate answered by a Treasury Minister. Indeed, I should like to see my right hon. Friend the Chancellor of the Exchequer at the Dispatch Box. I do not suppose that he would be able to say very much, because we have to accept that between now and Budget day he is in purdah, but I hope that he will read the debate and take action on what is said during it.

Mr. John Prescott: That is true of every Department.

Mr. Colvin: We shall hear what my hon. Friend the Parliamentary Under-Secretary of State says. We are looking for action by the Department of Transport, too.
It is appropriate, therefore, that in suggesting policies to halt and, if possible, to reverse the decline of our merchant fleet I should start with fiscal policies. Even if the General Council of British Shipping has slightly overplayed its hand in years gone by, I believe that its new proposal, which formed part of the industry's submission to the Government for the 1985 Finance Bill, for a 50 per cent. ship allowance on new and secondhand ships in addition to the 25 per cent. writing-down allowance should be considered most seriously. There are other proposals on balancing charges, consortium group relief, the business expansion scheme and overseas earnings tax relief. I know that they sound a lot, but they do no more than bring us into line with some of our main overseas competitors.
On manning, I have paid tribute to the way in which seamen have helped to improve productivity. Of course, most of the reductions that have already been made through the joint efforts of shipowners and unions are in discretionary manning. It needs the Department of Transport to adopt a more innovative and flexible attitude towards statutory manning levels, particularly for officers, if further progress is to be made.
I welcome the recently agreed research into manning and technology which the Department of Transport is sponsoring, and the efficient ship project, at present the subject of a feasibility study being sponsored by the Department of Trade and Industry, could show us how to make further progress in combining high technology and lower manning, and Britain is very good at that
Related to manning are the subjects of regulation and safety. Britain has taken a lead in improving safety at sea. In 1959 we helped to set up what is now the International Maritime Organisation and have consistently applied safety standards which are stricter than those required by the IMO convention. As a result, the casualty rate for British-registered ships is now only one eighth of that of the world fleet for similar ships. That is good, and it is very welcome, but many of the requirements, both for safety and other equipment, may be unnecessarily restrictive and saddle British operators with unreasonable additional costs. Mr. Iain Sproat, when he was Minister, began to get to grips with this problem, but the task of removing petty regulations is far from complete and remains a major deterrent in terms of money and time to owners and operators wishing to "flag in" and sail under the Red Duster. We also want to see the rules tightened and enforced internationally to prevent our overseas competitors sacrificing safety in order to cut costs and therefore to underquote us.
I have mentioned the unfair protectionist policies of many of our overseas competitors. Unfortunately, our partners in Europe are among the worst offenders. Two things have happened which might help to put that right. The first is the appointment of Mr. Stanley Clinton Davis as Transport Commissioner. Those of us who knew him in this place will welcome the arrival in that office of someone with such knowledge of transport matters. The second is the publication by the European Commission of


its comprehensive paper outlining a possible common shipping policy. Our shipping industry has already welcomed that and I do too. It is long overdue.
Shipping is excluded from the competition articles of the treaty of Rome. That is why the Commission's proposal to open up existing restrictions within the Community concerning cabotage and cargo reservation is welcome. I understand that it is also to make proposals for defending British and Community shipping from protectionist measures and unfair practices in other countries throughout the world, particularly the Eastern bloc and the developing nations. How about subjecting the Comecon fleet to a quota system for calls at European ports if those countries continue to refuse to allow European ships to call at their ports?
Can my hon. Friend the Minister tell us whether Her Majesty's Government support the view that if we in Europe could get our house in order and adopt a common policy toward the rest of the world we could negotiate from a position of far greater strength for the open trading system upon which the prosperity of our shipping industry depends? For example, the Brussels package, which was a European response to the UNCTAD liner code, will go a long way towards securing access to the crucial cross trades for British shipowners.
The United Kingdom cannot deal with the problems of unfair competition single handed. If we reacted against protectionism by closing our ports to liners of the offending countries, it would do us no good at all unless the ports of Rotterdam, Antwerp and Le Havre were also closed. There is obviously a role for the Community here, but I hope that it will be a constructive one, aimed at keeping trade open, rather than retaliating against the outside world. Can my hon. Friend tell us how the Government will react to the idea of a common shipping policy?
One target for united European action is the United States. I understand that a dialogue on a broad range of shipping policy issues has been going on for two years now between the United States and the Consultative Shipping Group, which includes the European countries and Japan. That dialogue has been mainly concerned with preserving free access to trades in the liner shipping sector in the face of protectionist restrictions in other countries. Is it not about time that we started straight talking with the Americans about the repeal of the Jones Act, which reserves all their cabotage for their ships?
It is not, of course, all gloom and despondency in every sector of our shipping industry. The cruise liner business is reasonably healthy and ferries are doing well, thanks to the growth of trade with Europe, which has hit our deep sea cargoes. Until recently the offshore oil market has been a growth sector, with the British offshore support fleet of some 150 vessels now accounting for nearly 20 per cent. of the United Kingdom-owned and registered fleet. But British supply-shipowners are extremely dissatisfied with their position vis-a-vis foreign flag supply boats operating in the North sea, particularly our Norwegian allies.
At any time one would find that, out of 180 supply ships in the United Kingdom sector, about 40 per cent. would be flying a foreign flag and half would be Norwegian. Contrast that with the position in the Norwegian sector where, out of about 80 ships, rarely more than a couple

fly a foreign flag. Today there is only one British flag ship in the Norwegian sector, and that is beneficially owned in Norway.
Two financial inquiries have been carried out in recent months, one by the joint shipowners and the other by the joint Governments. Why are Norwegian ships able to offer lower rates? If it is true that the Norwegian financial assistance gives them the edge over the British, surely our financial system should be changed. At least, British shipowners should be given the chance to requote for business in the Norwegian sector.
Before concluding, I want to mention briefly the conference system, registration and defence. I am sure my hon. Friends will agree that the idea of the liner conference system—in effect, one of cartels—is anathema to our free market economy ideas. But we are dealing with a business which is neither free nor fair. Therefore, any immediate tinkering with the system would quickly lead to disaster, with the break-up of much of our fleet and the consequent loss of influence world-wide.
The conference system is still needed to ensure stability and regularity in the provision of liner services. However, I am critical in my pamphlet of the way in which conferences have repeatedly increased rates without consultation. How does my hon. Friend feel about the conference system? The House would particularly like to hear whether the idea that was being canvassed a little while ago on loyalty arrangements is still being pursued. That was, in effect, that no individual shipper could be required to put more than 70 per cent. of his custom with the conference in order to qualify for the rebate available in many trades in return for loyalty.
I noted that the Department of Transport recently issued a consultative document on registration suggesting changes in the criteria for registration under the United Kingdom flag. That contains valuable proposals for regularising the position in relation to Commonwealth countries where we have no jurisdiction. I hope that the Government will legislate along those lines. Will they go further and establish a register of ships owned by British companies, but registered under foreign flags, so that at least we know the real size of the British beneficially owned fleet? Most importantly, perhaps, will the Government stand firm against demands from the developing countries that open registries should be outlawed?
Lastly, I want to mention the Merchant Navy's defence role, which was touched on during the recent debate on the Royal Navy and about which the Under-Secretary of State had just given evidence to the Select Committee on Defence. Is today's British flag fleet really adequate for our defence needs? We were only just able to assemble 54 merchant ships in 1982 to support the 53 Royal Navy ships in the Falklands task force. Even then, some of those had to be chartered foreign flag carriers. Will my hon. Friend tell us today what he told the Committee last week? Will he also say something about the Government's review of future requirements for merchant ships in support of defence plans? As there is now general agreement that if the decline of our fleet continues our defence capability will be greatly weakened, what kind of arrangements will the Government be prepared to make when gaps in our strategic reserve are identified?
Even if the Government can requisition foreign ships to make up any gaps in our own provision, what will they do to ensure that we have an adequate supply of trained


British crews to man such ships when foreign nationals are not prepared to face hostilities? Can the Government cross their hearts and echo the words of G. W. Hunt in 1875, who said:
We don't want to fight, but, by jingo if we do,
We've got the ships, we've got the men, we've got the money too.
What has my hon. Friend to say about that?
Our Merchant Navy is a big and somewhat technical subject for debate. I have spoken for far too long already. Nevertheless, I have left a multitude of items for hon. Members to cover.

Mr. Bryan Gould: I have been listening with great interest and some sympathy to what the hon. Gentleman has had to say, but does he not find it surprising —I certainly do—that neither of his hon. Friends who represent Southampton is present in the Chamber to hear what he has to say?

Sir David Price: I represent part of Southampton. Eastleigh now includes the Woolston ward of Southampton.

Mr. Colvin: The intervention of the hon. Member for Dagenham (Mr. Gould) does not do him credit. My hon. Friends the Members for Southampton, Itchen (Mr. Chope) and for Southampton, Test (Mr. Hill) have repeatedly taken part in debates, and I am sure that they will be in the Chamber later to participate in this debate.
With the exception of the hon. Member for Dagenham, who has made a facetious intervention, I thank those hon. Members present for their patience and their supportive noises during my speech. The decline of our merchant shipping industry from the pre-eminent position that it occupied so recently is truly a melancholy story. Our fleet faces extinction, and we should be fighting for its survival at least as passionately as we fight for the preservation of the whale. The trouble is that it is not until the species is about to be extinct that anyone takes any notice. My right hon. Friend the Secretary of State for Transport and my hon. Friend the Under-Secretary of State now face a challenge and an opportunity. If they fail, and if our merchant fleet disappears, they, like the Cheshire cat, may disappear too—the only differences being that there will be no smile left behind.

Sir Paul Bryan (Boothferry): I declare my interest as deputy chairman of Furness Withy and Company Ltd. I start by congratulating my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on his choice of subject, which is not only important but under-debated.
I shall not recite again the figures that tell the sad story of our merchant fleet since 1975. The reason we Members of Parliament are debating shipping today is that each one of us is deeply concerned that the fleet has fallen in size, is still falling steeply and is expected to fall still further. Britain is now losing merchant ships at a greater speed than at the height of the second world war. They are victims not of torpedoes but of ever-rising costs, far eastern competition, and subsidised shipbuilding which makes ships too cheap to buy and thus leads to a surplus that in turn means uneconomic rates and cut-throat competition.
That general situation was exacerbated by the oil crisis, which led to a recession and to countries drawing their oil supplies from fields nearer home, thus making large

tankers redundant. No one has escaped the biggest shipping slump for 50 years. Even the spectacularly successful Hong-Kong shipowners, Y.K. Pao, C. Y. Tung and Frank Chao have reduced their ship numbers and diversified into property, container terminals, support vessels for oilfields and so on. The great BP and Shell tanker fleets are a fraction of their former size
In those worldwide conditions the British fleet, with its high costs, was bound to suffer more than most. Many famous shipping names have disappeared. Others such as British and Commonwealth and Furness Withy have been selling off ships during the past five years at an almost hectic speed, and have diversified into other areas. P and O has had to write off £77 million in its balance sheet in respect of gas carriers.
However, there is a brighter side to the picture. For example, 20 per cent. of the merchant fleet—150 ships in all—is servicing North sea oil and other more distant oilfields with some of the most sophisticated ships in the world such as the Orelia, which was fitted out on Humberside and is now in the Persian gulf. We lead the world in luxury cruising. The commissioning of the Royal Princess took one back to the launching of the Queens, except that, regrettably, the Royal Princess was not built on Clydebank. The Atlantic Conveyor, a third generation combined container roll-on roll-off ship is about to join the Cunard fleet. As my hon. Friend the Member for Romsey and Waterside has said, the ferries are also prospering.
Nevertheless, the ugly truth is that new tonnage on order for the United Kingdom fleet is running at an annual rate of about 200,000 tonnes—in other words, at less than the tonnage of just one very large crude carrier. With dropping ship prices and plenty of modern ships on the market, there is no temptation to build anything but specialist ships.
So much for the past and present. What of the future? The bulk carrier and tanker trades are still depressed, but over the past few months, after a vicious struggle in the north Atlantic, the liner trade has been moving into profit in most parts of the world. But just as the horizon begins to brighten storm clouds loom up in the shape of 14 huge new container ships almost twice the size of what is at present considered large, which are owned by United States lines, and of an even bigger fleet of new container ships of slightly smaller size from the Evergreen line of Taiwan.
Both of those lines are starting round-the-world services, increasing world container capacity by about 40 per cent. Whether or not those huge ventures prosper, they must have a devastating effect on rates and hence on the profits of the main world container lines, such as OCL of Britain, which are preparing in various ways to meet this challenge.
We are moving into a world of huge investment in which only the strongest will survive. It is against that background that the Government have to make their Budget decisions and industry must make its business decisions. The main firms in the industry—Cunard, P and 0, British and Commonwealth, Ocean and Furness Withy—are not heading for bankruptcy. They are firms with access to capital and they have to decide how to invest it. In recent years that investment has inevitably been in the direction of diversifying away from shipping.
The Government, in turn, will have to decide whether shipping really is to be a special case, with no guarantee that fiscal measures will stop the rot. My hon. Friend the


Member for Romsey and Waterside has described the fleet's tremendous commercial value, which goes well outside the industry itself. But another obvious justification for Government action might be defence, and an inquiry is already promised. This is surely unnecessary. The General Council of British Shipping is already deeply involved with Government in contingency planning for defence purposes, both in respect of NATO and nationally. There are also two Standing Committees dealing with this issue, and three statistical studies are now in progress.
We shall duly be told that the Merchant Navy is adequate for a Falklands-type operation. But we know that the whole British defence set-up is ideal for such an operation. We probably have the most efficient forces in the world, but they are small and—owing to lack of conscription, recent wars and, in the case of the Navy, a waning merchant marine — we lack reserves. In the Falklands, casualties were light and reserves were uncalled for. We had to use only our crack troops, and the mix of our Merchant Navy, with its accent on cruise ships, ferries and RO/RO ships was particularly suitable. It is in a more protracted campaign, in concert with our allies, that our reducing merchant fleet with its corresponding reducing core of trained personnel will be found wanting.
None of that was taken into account at the last Budget, when, for the first time, shipping lost its status as an exceptional case. By Committee or Report stage of the Finance Bill, even the Treasury was slightly frightened at what it had done and some small concessions were made. However, by then confidence in the industry was badly shaken.
At that time the Chancellor's no-distortion rule was new and shining bright. Since then student grants, pensions and the like have shown that nothing in this political life can remain rigid and survive. Every other country of any consequence is supporting its shipping in one way or another. When Britain did that foreigners invested in our fleets as a flag of convenience. Now the opposite is true. Our shipping is actually discriminated against since it cannot enjoy regional grants, enterprise zones and the other titbits offered to land-based industries.
The GCBS has made its proposals and my hon. Friend listed some of them. In my eyes the most important of these is a ship allowance. To enable companies to write off their ships more quickly, in addition to the 25 per cent. writing-down allowance, there should be a 50 per cent. ship allowance for new and second-hand ships.
The underlying argument is that the continued existence of a substantial British merchant fleet is of sufficient national importance to warrant special assistance. The Chancellor may find help given discreetly through the tax system repugnant. He knows that if the new tax rules are bent even slightly for shipping, he will be besieged with special cases.
If the Chancellor can be persuaded that assistance is required, it may be better if the arguments are discussed openly and any resulting subsidy is explicit. A shipping allowance would come exactly into that category. It would show that the Government were convinced, without doubt, of the importance of shipping. It would do something to restore confidence in the industry.

Mr. Donald Stewart: I congratulate the hon. Member for Romsey and Waterside (Mr. Colvin) on his good fortune in the ballot and on fixing on the merchant service as his subject. I had begun to think that the future of the British merchant marine was a minority interest in the House, although a number of hon. Members, such as the right hon. Member for Taunton (Mr. du Cann) and the hon. Members for Jarrow (Mr. Dixon) and for Kingston upon Hull, North (Mr. McNamara), have recently made speeches on the subject.
I am surprised at the Government's attitude because the merchant fleet plays a vital part in defence. Even if the Government were indifferent to the trading and employment aspects of the subject, the connection between the merchant fleet and defence should be in the Government's mind.
The disappearance of the fleet is startling. "Disappearance" is a fair word. People of my generation remember how thin the lifeline was in the early 1940s. My war service was in the Royal Navy, so I am not scratching my own back when I pay tribute to the vital link that the Merchant Navy provided. When one recalls that, one is more than ever surprised at the Government's lack of interest in the erosion of the merchant fleet. We experienced a great humiliation in the Falklands war when we had to charter foreign merchant ships to make up the numbers.
Once we had 50 per cent. of the world's commercial shipping. We are now down to 700 ships or a tonnage of 21 million. The Greeks have more than five times that number in their merchant marine. In 1975, we had 1,614 ships or a 50-million tonnage.
Ships have disappeared to take up flags of convenience for various reasons. I refer to lower taxation, lower manning levels or odd watchkeepers' certificates —where they exist—as opposed to the British mariners' certificate which is demanded under the Red Ensign. Reduced safety regulations elsewhere are also an attraction, but it is a mistake to think that all ships sailing under flags of convenience have lower standards. Some of them are up-to-date.
A restriction applies to our coastal trade. Our so-called partners in the Common Market bar our shipping from their coasts while we have no recourse to the same practice here.
On the invisibles side, the decline of the United Kingdom fleet between 1980 and 1983 reduced the trade balance on sea transport by £1 billion. That is confirmation of what I and some other hon. Members have said for a considerable time—that the Government do not appear to care about the merchant fleet. Their lack of concern has cost the country £1 billion.
In addition, the Chancellor is withdrawing fiscal aid and putting the competitive position of the merchant service at an even greater disadvantage. As the hon. Member for Boothferry (Sir P. Bryan) said, the last Budget did considerable damage to the merchant fleet when it proposed the withdrawal of depreciation allowances.
The position of our seamen was made worse in the same Budget by the withdrawal of the allowance on foreign earnings. That can mean as much as £10 for an able-bodied seaman and up to £40 a week for senior masters. Seamen


who work outside the country incur extra expenses; they are away from their homes and do not enjoy the amenities available to people living in the United Kingdom.
That ill-judged imposition will inevitably lead to a demand for bigger pay increases. That will make the position even worse. It will reduce the Merchant Navy's competitiveness, although the Prime Minister told me recently that that was essential for the continued existence of the fleet.
I hope that the Minister will convey to the Chancellor what I have said about the availability of fairer allowances for depreciation and restoration and the overseas earnings allowance.
For a maritime nation, the Government's indifference is astounding. In the last war the deep-sea trawling fleets and experienced seamen were the backbone of the navy. That has gone. The only reserve of trained seamen is in the merchant fleet. Any maritime nation neglects that at its peril. The problem has received little attention in the House. It involves trade, employment and defence. If we neglect those matters, the United Kingdom will be placed at a disadvantage.

Mr. Roger Stott: It might be convenient if I intervene briefly now. I do not have a declaration of interest to make other than happy memories. I am not a vice-chairman of a shipping company, but I am an ex-able seaman. I joined the Merchant Navy 24 years ago when the size of the British fleet, of the shipbuilding industry and of our port industry was very different. It is a sad reflection on Government policy that we have reached such a terrible state in our shipping, shipbuilding and ports industries.
I thank the hon. Member for Romsey and Waterside (Mr. Colvin) for choosing the plight of the British merchant fleet as the subject for debate today. As he has already reminded us, it comes at an important stage in the development of the decline of British shipping. Unless we take some drastic action, this once proud maritime nation may have no maritime fleet left.
Two years ago, the National Union of Seamen—of which my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) is the only sponsored Member of Parliament—produced two documents which outlined the dramatic decline of the British merchant fleet. One was entitled "Flags of Convenience" and the other "British Shipping: Heading for the Rocks." I recommend the Under-Secretary to read them both.
It would appear that singularly little action has been forthcoming from the Government on the state in which Britain currently finds itself. That inaction has provoked a storm of protest from the General Council of British Shipping. I note that in the brief that it sent us today it commented that the 1984 Budget was a disaster for United Kingdom shipping.
Mr. Jim Slater, the general secretary of the NUS, wrote to the Prime Minister on 8 November spelling out in the plainest terms —one might say with a touch of mess deck language — the dramatic decline of Britain's merchant fleet, and suggesting remedies to halt that decline.
In the business section of The Sunday Times on 2 December, Philip Beresford and John Huxley wrote an article entitled "Britain's abandoned ships." No doubt the Minister read that. There was also an article in The

Guardian by Andrew Cornelius entitled "Facing a fight to the death." That graphically outlined the problems being faced by British shipping. Given the state of British shipping today, it  hardly surprising that the hon. Member for Romsey and Waterside, together with his colleague Jonathan Marks — who I understand is a shipbroker and member of the Conservative party —should publish a report entitled "British Shipping—the Right Course." I reiterate that the House should be grateful to the hon. Gentleman for choosing the subject of shipping for today's debate.
I shall do the hon. Gentleman the honour of discussing the report of which he was co-author. I have read it. The report attempts to analyse the reasons for the decline of the fleet and makes recommendations for halting and reversing that decline. Much of the analysis echoes the examination by the NUS of the problems of the United Kingdom shipping industry. Despite some hysterical and factually incorrect sections on manning, collective bargaining and trade unions, the report makes a worthy contribution towards getting the Government to give serious consideration to shipping.
The General Council of British Shipping has reacted to the report in an extremely hostile manner, because it attacks two of the fundamental elements of protection for existing companies involved in shipping — the conference system and the fiscal reliefs peculiar to shipping. It is clear that the authors of the report believe that the GCBS and the shipping companies have, on the one hand, looked for every form of advantage available, including the elimination of competition, but, on the other hand, have publicly espoused free competition.
I believe some of the suggestions in the report to be wrong, but some of its recommendations are certainly worth pursuing. Some of its comments are a direct criticism of the Government's performance thus far. The hon. Gentleman and his colleague outlined graphically the decline of the British fleet and set out certain measures to halt that decline. I shall not bore the House by detailing them, but I subscribe to many of them.
In addition to the points made by the hon. Gentleman in his speech, there has been a process of concentration through the merger of shipping groups, diversification by shipping companies into other areas and a build-up of foreign ownership. Apart from manning restrictions, which I believe to be factually incorrect, the factors mentioned in the report were also identified by the NUS in its pamphlet in 1982. The report demonstrates a belief that the United Kingdom can act alone against these trends. It implies that support for existing shipping companies would not be in the nation's interests.
I wish to quote a number of passages from the report. It states:
the temptation to go behind the fence to reach bilateral agreements with the developing countries in order to buttress the position of established companies must be resisted … If we succumb to [this temptation] we head towards complete regulation of shipping … the survival of the British merchant marine depends upon the creation of a broader base of entrepreneurial ship-owners, free from unnecessary and burdensome fiscal and regulatory constraints, and thus in a position to face fair competition and the changing trends of the shipping markets of the world. Government should use its powers to create a fairer environment for international competition.

Mr. Colvin: roseߞ

Mr. Stott: I shall give way in a moment.
Acknowledging that the British people play cricket while other countries play karate the report's basic solution is that everyone should persuaded to give up karate and play cricket. That reveals a very slim grasp of the realities of international trade and the commitment of other Governments to protect their interests, rather than the fixation of a single ideology, which I understand from the report is based upon unfettered competition—

Mr. Colvin: rose—

Mr. Stott: The hon. Gentleman should be patient.

Mr. Colvin: The longer that the hon. Gentleman continues, the more I shall have to answer. He criticised the idea of a wholly regulated market, which is precisely what the bilateral agreement between Britain and Sri Lanka would lead to and which would be anathema to the whole principle of free trading.
The hon. Gentleman failed to acknowledge that in the NUS paper and brief, which I have read, the NUS recommended a totally controlled environment. It wants to control everything. It would nationalise everything—the shipping lines, the shipments, the forwarding agents, the docks and the shipbuilding companies. The whole lot would be integrated on a national state-owned basis. The NUS thinks that that would solve the problem. But it would not. It would lead to retaliation from our competitors overseas. The hon. Gentleman must appreciate that the cross trades are vital to our shipping industry. If we do anything to weaken our position, we will fire the equivalent of more than one Exocet at our fleet.

Mr. Stott: With respect to the hon. Gentleman, I do not know to which pamphlet he has referred. The NUS document does not mention the nationalisation of shipping companies. It certainly mentions a firmer degree of Government control, and I go along with that. Prior to the election the Labour party produced a document referring to a national shipping line. I do not think that the hon. Gentleman will find what he has suggested in the NUS document.
The hon. Gentleman is not a reluctant critic of the role of the Government. His report states:
A long-term policy for British shipping is hard to detect. If there is an official view on the structure of the industry, on its tax regime, on its requirements for registration and regulation, it has yet to be made public as a coherent whole.
That is absolutely right.
The report continues:
A general view has been promulgated neither by Ministers nor officials on the structure of the industry.
Again, the hon. Gentleman is spot on.
The report is critical of a lack of any real regulation over the conferences. It states:
Despite a political belief"—
that is the belief of the hon. Gentleman and his friend—
that the conference system is ripe for reform … we have accepted the argument that any immediate dismantling of the system would quickly lead to disaster with the break up of much of the fleet and a consequent loss of influence worldwide.
The pamphlet sets out certain suggestions in respect of the conference decisions. I subscribe to the recommendations, which are absolutely right.
The hon. Gentleman talked about cabotage and state aid and said that the Government should be prepared to go to

the European court, if necessary, to ensure that other EEC countries do not breach the treaty of Rome on cabotage. The report makes a dramatic leap from having ended cabotage in Europe to pressing the United States Government to abandon cabotage and reversing Government-generated cargoes to United States flag ships. The demonstrates degree of naivety. The chances of getting Greece to abandon cabotage are extremely remote, especially now that it is the dominant shipping industry within the EEC. Italy is trying to obtain EEC approval for a package of credit measures that would encourage Italian shipowners to order new ships in Italian yards. The United States Government have categorically stated that they will not alter the principles of the Jones Act, which provides for United States cabotage.
The blind faith of the hon. Member for Romsey and Waterside in free trade leads him to confuse the ideal world of free trade and entrepreneurial endeavour, which he would like to see, with the real world of shipping. Cabotage exists and will continue to exist in the real world.

Mr. Colvin: When I suggested that it was about time that we talked seriously with the Americans, I went on to explain that we are already taking that approach. As is stated in my pamphlet and as I said earlier, we shall be more capable of acting internationally to try to remove some of the unfair practices of competing nations if we act jointly with our European partners. That is why my question to my hon. Friend the Parliamentary Under-Secretary of State was so important. I referred to the shipping policy document that has been produced by the commissioners and I to Mr. Stanley Clinton Davis, who was an Opposition spokesman and who is now a Transport Commissioner. Mr. Davis should be in a strong position to be able to do something about cabotage and the evolution of a common shipping policy. We can tackle the problem of unfair competition elsewhere in the world only if we act in concert with our European partners. I hope that the hon. Gentleman will endorse the idea of a common shipping policy. If he does not, he will sign the death knell of the British merchant fleet.

Mr. Stott: What a tangled web we weave. I do not subscribe to what the hon. Gentleman has said. I do not think that we are likely to achieve any common cause with our European partners, for the reasons that I have outlined. I cannot envisage the Greeks, the Italians, the West Germans or the French agreeing to what the hon. Gentleman proposes. I redirect the hon. Gentleman's mind to a document produced by the NUS in 1984 in which it proposed that, in the first instance, coastal shipping should be regarded as domestic transport. It suggested that it was valid for every nation to reserve its coastal trade for its own flagged ships. However, if the EEC were to adopt new regulations within the terms of the treaty of Rome, it would be more appropriate to lift restrictions within the Community but to reserve the coastal trade to vessels registered within EEC states than to abandon coastal shipping to all comers. That is a proposal that would probably find acceptance.
I support the attack of the hon. Member for Romsey and Waterside on the Government's taxation measures. That attack has been taken up by others, so I shall not rehearse his arguments on taxation. However, it greatly concerns the shipping industry that it is not treated in a way that would encourage it to keep British ships under the British flag.
The hon. Member for Romsey and Waterside has repeated the analysis that is set out in the document produced by the NUS on registration by acknowledging that foreign investment represents about half the ownership of the United Kingdom fleet. However, rather than seeing this as a source of insecurity and questioning more deeply why United Kingdom investors have been reluctant to put their money into shipping, the hon. Gentleman suggests that the development of a coherent shipping strategy depends on foreign investment. Surely he is aware that the whims of foreign investors are influenced by factors outside the control or influence of the British Government. The abandonment of United Kingdom shipping to their whims hardly demonstrates a commitment to ensure that United Kingdom shipping recovers from its current appalling decline.
The report of the hon. Member for Romsey and Waterside draws attention to the need to ensure that substandard vessels do not obtain British registration without complying with British safety standards. That is to be applauded. However, the suggestion that more inspection work should be delegated to private sector classification does not make for an adequate system of ensuring that common safety standards are met and maintained.
The hon. Gentleman's pamphlet can be applauded also for its call that eligibility to register vessels should be confined to those over whom jurisdiction can be exercised. However, that contradicts other statements which support flags of convenience operators. Countries which operate the flag of convenience arrangement offer a major attraction, because they do not exercise effective jurisdiction.
The hon. Member for Romsey and Waterside referred to manning. The hon. Gentleman would not expect the Opposition and the NUS to agree to, participate in or countenance levels of manning which would clearly be unsafe. He would not expect us to allow the status of our seamen to be undermined by reducing wages and conditions to levels at which other seamen have to operate. The status of our seamen is a cost to the industry and it is one that the industry has to bear. We cannot, will not and should not be expected to agree to the lowering of the standards that our seafarers have obtained through negotiations with shipowners. We cannot allow that to happen.
The hon. Member for Romsey and Waterside was right when he mentioned the role of the merchant fleet and the defence of the nation. The defensive role of merchant shipping has long been recognised and supported by the Opposition and the NUS. It is to be welcomed that others adhere to the union's position. However, the hon. Gentleman's pamphlet seems not to take into consideration the link between shipping, shipbuilding, ship repairing and Government support in maintaining a defence capability. It is important that we recognise the link.
I apologise to the House for spending some time responding to the issues that the hon. Member for Romsey and Waterside sets out in his pamphlet. I thought it only right to extend to him the courtesy of demonstrating that I have studied his pamphlet and taken some care in trying to understand what he has written and said. A number of sections are flawed, and I cannot agree with the conclusions that he has drawn in those respects; but his

pamphlet and the suggestions that he has made, together with the debate that he has initiated, are to be greatly welcomed.
The decline in British shipping is serious. There is a general recognition throughout the House of that fact. In the last decade, the British merchant shipping fleet has declined from 50 million tonnes to 20 million tonnes. During the past 10 years, the number of seamen working on British ships has been halved to about 37,000. During the past two years, the balance of payments contribution from merchant shipping has been cut in two. The reason is simply that there are too many ships chasing too little cargo. Unfortunately, that is a fact of life.
We have heard and shall continue to hear the appropriate plaudits for our merchant seamen. With some regret I have to say to the Under-Secretary of State that the tax relief measures for our seamen undertaken last year by the Chancellor of the Exchequer in his Budget were a pretty poor reward for their service in the Falklands war. I hope that, if the Under-Secretary of State has some influence with the Chancellor of the Exchequer he will tell him that that measure went down badly in the shipping world, and certainly with those brave men and women who manned our merchant fleet during that crucial time.
Our merchant fleet is in bad shape. The Government have presided over 4 million of our citizens on the dole and over our industrial decline. Will they preside over the sun setting on the Red Ensign? I very much hope that that will not happen. The House expects the Under-Secretary of State to recognise that there is serious trouble ahead unless the Government do something about it.

Mr. Edward du Cann: Following the admirable precedents set by the right hon. Member for Western Isles (Mr. Stewart) and the hon. Member for Wigan (Mr. Stott), I should like immediately to congratulate my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on his choice of subject. This debate was certainly timely, and I should like to congratulate my hon. Friend on the excellent speech to which we had the pleasure of listening. I much appreciate the kindly things he said about the all-party parliamentary maritime affairs group and appreciate his consistent support of that body.
I have a single statement to make and a single question to put. I believe that I shall make common cause with the hon. Member for Wigan, my hon. Friends the Members for Romsey and Waterside and for Boothferry (Sir P. Bryan) and the right hon. Member for Western Isles. Indeed, I should be surprised if the House is not unanimous in these matters.
Britain is faced with an alarming decline in her merchant fleet which is now assuming crisis proportions. That is undoubted. The present condition of Britain's merchant navy is the Achilles heel of our economic and defence policy. The question that was posed immediately by my hon. Friend the Member for Romsey and Waterside was: what do the Government propose to do about it? The need for action now — action this day, as Winston Churchill used to say—is undoubted.
Every right hon. and hon. Member who has participated in the debate so far has given the facts. In 1967, the British fleet was the largest in the world; by June 1983 it had dropped to eighth place in the world league, and it is still declining. What is worse, during the past three months no


orders for merchant ships have been placed in British yards. Picking up a point made by the right hon. Member for Western Isles, in 1970 Britain had 160 distant water trawlers, last year it had 10, and this year it has none. The loss of trained seafarers is now running at a rate of 5,000 officers and men a year. Educational and training establishments are being closed, and the cadet schemes are virtually extinct. In 1970, the annual number of entrants of engineering cadets was about 1,000; last year it was 70. It does not matter which aspect of the scene one examines —the picture as a whole is horrifying.
It is possible to say that there is a world surplus of ships and shipbuilding capacity and a world recession, as my hon. Friends the Members for Romsey and Waterside and for Boothferry pointed out. Of course that is true, but it is only part of the story. Since 1945, world trade has grown eightfold—with 99 per cent. or more carried in ships. As my hon. Friends have pointed out, other nations have substantially expanded their fleets. They include China, Korea and, not least, as my hon. Friend the Member for Romsey and Waterside pointed out, Comecon and the Russians.
Soviet Russia is now a formidable maritime state while, in comparison, the United States is a naval power only. The Soviet naval fleet is now larger than the British fleet. Russian warships are second in number only to those of the United States. The Soviet submarine fleet, with 400 ships in service—a new submarine completed every 40 days—is larger than the one Dőnitz commanded, which so nearly brought our country to its knees in the 1940s. The Russian fishing fleet—also used from time to time for military purposes—is the largest in the world, as is the Russian fleet of ice-strengthened ships. The Soviet Union's hydrographic capability is by far the greatest in the world while ours—potentially the finest in the world — is disgracefully neglected, as I have often complained. I cannot get out of my mind the words of Admiral Gorshkov:
Soviet seapower … has become the optimum means by which to defeat the imperialist enemy and the most important element in the Soviet arsenal to prepare the way for a Communist world.
It is not unimportant to ponder those words while we are in the midst of this successful visit, which I greatly welcome, by Mr. Gorbachev.
What about our friends and allies? It is a fact that the United Kingdom's merchant fleet is declining faster than that of any of our allies in NATO or in the European Community. We can, therefore, safely deduce that the dominant cause of the decline of our Merchant Navy is not the recession but the way in which our country has reacted to it.
It has been common ground among every right hon. and hon. Member who has spoken in this debate that a national shipping capability is vital in peace time, for numerous good commercial reasons — for instance, its direct contribution to our balance of payments, which is still running as high as £1 billion a year, although, as the right hon. Member for Western Isles pointed out, it had gone as high as £2·5 billion in 1974. Such capability is vital for the security of availability of cargo space, and for some control over freight rates. After all, 98 per cent. of our trade goes by sea.
It would surely be extreme folly to be exclusively or nearly dependent on foreign carriers and to put Britain's life support system in the hands of our competitors, or perhaps even our enemies. This process has already gone pretty far. I cite three instances, one of which was given by my hon. Friend the Member for Romsey and Waterside when he pointed out that, of 180 supply ships in the British sector of the North sea, only about 100 fly the Red Ensign. Clearly, that is different from the Norwegian sector, as my hon. Friend rightly said. Secondly, believe it or not, three quarters of our oil and gas from Sullom Voe in the Shetlands is carried in foreign ships. Thirdly, in total, less than one third of our imports are now carried in British registered ships. Some may think, as I do, that the process has gone too far already, but there are many indirect reasons for supporting a substantial British Merchant Navy capability. A thriving and substantial British merchant fleet is the key to and basis for a British shipbuilding industry, a British ship repairing industry, a prosperous marine engineering and equipment industry, and substantial invisible earnings in the City through brokerage, insurance and so on.
London is currently the world maritime centre. I believe it to be of great benefit to the United Kingdom that we should maintain that position. In an emergency our national merchant fleet, as the hon. Member for Wigan said, is, in effect, Britain's fourth arm of defence. Its military task is to transport men and supplies; its economic task is to keep our people fed and supplied. Besides that, as the right hon. Member for Western Isles and my hon. Friend the Member for Boothferry said, it is the Navy's reserve of manpower. Adverting in particular to what the right hon. Member for Western Isles said, a comparison with the years gone by that he and I remember is interesting. In 1934, there were 200,000 British men at sea upon whom the Navy could call for reserves. Today, there are a mere 45,000
All those benefits to the United Kindgom economy and employment are at risk. They should not be. They need not be. My hon. Friend the Under-Secretary is a great friend of mine whom I much admire. He is serving our country well in Government. I must tell him that in the face of the most worrying circumstances I regard the inertia and complacency of successive Governments as intolerable. I remember raising the subject on the Adjournment in November 1982 The Minister then replying, who is not now in the House, said that he shared the concern that was expressed. He further said that he would come forward in the almost immediate future with some measures. Nothing happened. Now, even the OECD is sounding a clear warning in its publication "Maritime Transport" which states:
OECD Governments · .must take a more active part in shipping and can no longer rely on the resolution of problems between shippers and ship owners while limiting themselves to the role of observers".
Those are wise words. Someone said to me the other day that he thought the attitude of successive Governments to the provision of the Merchant Navy was the equivalent of the man who leant out of a window halfway up a skyscraper to watch a man falling from the top. As the man who was falling went past him he said, "How are you getting on?" The man replied, "So far, so good."
The Government cannot any longer just stand by. What is the right course for Ministers? I do not believe that policy is difficult to decide. I believe that all in the House


would agree upon it. We should declare loudly and certainly that Britain needs its Merchant Navy. We should accept that the Government have a responsibility to provide the political, diplomatic and fiscal climate in which shipping can survive and prosper.
Now to practical proposals. In the past 25 years—I am sure that we would all agree — shipping has advanced technically, it would seem, about as far as practicable. What with megaships, containerisation, integration with land transport and a substantial reduction in crew numbers, it is right to claim that the industry has done its part. Now, it seems, is the time for Government to back the United Kingdom commercial effort. I say now —I am sure I speak for the whole House—how much the presence of my right hon. Friend the Secretary of State for Transport to listen to part of the debate is welcomed.
What does Government backing of the United Kingdom commercial effort mean? I believe that what it means, above all, is all Government Departments acting together. We have listened to a torrent of complaints—I believe entirely justified—about the changes introduced in the last Budget by my right hon. Friend the Chancellor, with depreciation and tax allowances for seamen being removed. He could not have hit the industry a harder blow than he did with those two measures.
One is entitled to ask what consultation there was with the Department of Transport before those measures were introduced. What is the Department doing, on its own account, to influence other Government Departments to stop the chartering of foreign ships? What are we doing chartering foreign ships when so many of our seamen are out of work? Adverting to a point that has been made several times already, and which is in the minds of us all, I do not recall seeing Swedish, Danish and Norwegian ships in the Falklands when the Exocets were flying around. Out duty is to support our people.
Like my hon. Friend the Under-Secretary and my right hon. Friend the Secretary of State, I believe in the virtues of competition, but what our shipping companies are facing in world markets, as my hon. Friend the Member for Romsey and Waterside said, is anything but fair competition. For instance, five European Community countries ban United Kingdom ships from their coastal waters while we allow free access. That was a point brilliantly brought out by my hon. Friend the Member for Eastleigh (Sir D. Price) in a question to the Prime Minister a little while ago. Whatever the method is for dealing with it—we have been arguing across the House about it—why do we allow it at all? Why do we allow such a state of affairs to continue? A further 25 nations actively discriminate against British shipping using their ports although, again, their ships use our ports without hindrance. Why do we allow such things to happen?
Discrimination, to which my hon. Friend the Member for Romsey and Waterside referred, can take many forms. I have a note of about 68 different examples, many by developing countries. It is particularly odious when developing countries discriminate against British shipping when United Kingdom-financed cargoes are being delivered to their shores. Governments all over the world disregard the virtues of fair competition. It is therefore incumbent upon my right hon. Friend the Secretary of State to ensure that the Government mount a determined political and diplomatic offensive to counter discrimination.
Retaliation may even be called for. In my view, it is justified in the context of the United Kingdom's present employment position. We should have the courage and realism to do it. Since quotations have been the order of the day, not least from my hon. Friend the Member for Romsey and Waterside, who gave a particularly appropriate one, perhaps I could quote John Stuart. Mill who said:
In labouring for one's own country in the right principle we labour for all humanity.
What we need, in a sentence, is a national maritime policy designed to defend and advance the British industry and the British interest. We want that campaign carried forward with imagination and pertinacity. That is the message that will come from the debate. We look to the Government to provide it. I have every confidence that my right hon. and hon. Friends will take that initiative. Heaven knows, in the national interest, it is badly needed.

Mr. Ted Garrett: The hon. Member for Romsey and Waterside (Mr. Colvin) spoke one significant sentence of which I took note. He claimed that British shipping was facing extinction. That is nothing new for the House to hear. Hon. Members have been saying year in, year out that shipping was facing extinction, but successive Governments have done little or nothing about it. That is a sad fact, but one which we must accept.
On Friday morning I shall be at the Swan Hunter yard in Wallsend. I shall be on board the Atlantic Conveyor to have a final look at that ship before it goes on its maiden voyage. Unfortunately, that is the last merchant ship on the river Tyne, as the hon. Member for Tynemouth (Mr. Trotter) will confirm. It means that for the first time since the 1930s no commercial shipbuilding will be taking place on Tyneside, and it does not seem as though there is any possibility of receiving any orders within the near future. Therefore, not only merchant shipping but commercial shipbuilding is facing extinction.
My hon. Friend the Member for Wigan (Mr. Stott) asked the Minister a series of questions, during which he placed his finger on the dilemma that faces us. In the House there are basically two distinct political philosophies: one is the virtue of free competition, and the other is the principle of state intervention. Some would call it Socialism but I prefer to call it state intervention. That is the dilemma. The shipping industry is facing the same dilemma as the cotton, textile, machine tool and steel industries and the fishing fleet—I could go on and on. We have not resolved the dilemmas of those industries. For that reason, this country faces a desperate situation with regard to its productive and manufacturing basis.
The Government have distanced, and continue to distance, themselves from those problems. Because of a lack of state intervention, or at least a move by the Government of the day towards a more careful analysis of the problems, we continue to drift. The chances of any good coming out of today's debate are not great, because of the basic philosophy of the Prime Minister herself, so ably backed by some members of her Cabinet. She has often said that one cannot solve a problem simply by throwing money at it. The root cause of the problem is how we finance the British shipping industry in the context of the role that it performs, as has been said by Conservative Members, including the hon. Member for Romsey and


Waterside. We are no nearer an answer to the problem than we were when I started my political career in the House some 21 years ago.
I am proud to represent Wallsend in the north-east. There are strong and traditional maritime instincts in that area. People not only built the ships, but sailed in them. The port of South Shields, which my hon. Friend the Member for South Shields (Dr. Clark) has the honour to represent, suffered the largest loss of life among men lost at sea in both world wars. Men have also been lost in peacetime, sailing in ships that have provided the lifeline to our nation.
There are training facilities and technical colleges. There is one at Southampton, and one on the north-east coast, at South Shields, where men have been trained for service in the Merchant Navy—marine engineers, radio operators, deck hands and, of course, officers. When they went to sea, those men performed good jobs. They learnt traditional skills, and when their service ended they came ashore to play a highly valued role in industry because of their skills. The mere fact that there will be fewer vacancies for the positions that I have mentioned means that the skills referred to repeatedly in the House over the past few months will go. Is it any wonder that the recently reconstituted Engineering Council has decided to run a series of advertisements emphasising the role of engineering skills, which are so essential to this country's future?
In our shipping industry, this country has been to the fore in introducing regulations to improve safety, and these are being applied more and more in other nations' merchant ships. However, at the end of the day we must believe in ourselves and ask whether we want a shipping industry. The answer is still unclear.
Admittedly other countries are in a worse state than we are, but some are better off. I should like to refer to China. It is appropriate that I should do so, because this afternoon the Prime Minister left on a very important mission to China. China recognises that there is overcapacity in shipbuilding and has delivered a pledge not to disrupt world shipbuilding markets any further. China has told international shipowners and builders that for the time being it does not intend to become a major shipyard power. If that is so, one of the items on the Prime Minister's agenda, in addition to signing the agreement on the future of Hong Kong, should be to ascertain whether there is a market in China and, if so, what aid we can give British Shipbuilders or the private sector to obtain orders from that country.
Some five or six years ago I attended a lunch in the City of London given by the General Council of British Shipping. The then chairman was Peter Walters, who is now the head of British Petroleum. He forecast that there would be a surge of orders by British shipowners because of the aging of the British Merchant Navy. Regrettably, that has not happened, yet the prospects in other countries for more shipbuilding orders are not too bad. It would be foolish to think that no ships are being built anywhere. Many ships are being built in other countries, and we must look more thoroughly at the market; for example, in India.
It is estimated that one third of the Indian merchant fleet of over 10 million tonnes deadweight will be due for replacement by modern fuel-efficient container ships during the seventh plan for the years 1985–90, according

to informed sources in New Delhi. I might be straying from the motion, but I am sure that people in British Shipbuilders will read the debate, and I should like them to bear in mind that there is a market there and they can go out and get it. Just as I make no apology for asking for public assistance to get those orders, so I make no apology for asking for direct intervention to save the British shipbuilding industry.
It is often said that if one is a Socialist there is some doubt about whether one is as patriotic as those in the Conservative party, who make great claims to patriotism. But where is the patriotism? It should be applied in view of the simple fact that the British merchant shipping industry is essential to the defence of this country. There is a lack of patriotism by Conservative Members who have to make the decisions about whether we are to have a shipping industry. We cannot carry on just letting industries decline. That has to stop, in the interests not only of the people whose livelihoods are affected but, more importantly, of the whole nation.
Conservative Members who have participated so far in the debate have shown a remarkable awareness of the problem facing the industry, and they have displayed a certain amount of courage when they have had the temerity to criticise the fundamental policy that motivates the Government. If they can change that policy, they will get total support from the Opposition.

Mr. Neville Trotter: The situation is indeed grave. Britain's historical background to its maritime traditions and links is so great that it is staggering that two thirds of the Merchant Navy has disappeared in just nine years. Given that the history of the United Kingdom has been built up on our maritime endeavour, that is indeed staggering. I can only reflect that as a country we have failed to give more attention to the staggering decline in one of our great historical industries simply because employment in it has not been concentrated in particular parts of the country.
I believe that the man in the street—whether he lives at the seaside or inland—believes that Britain needs a Merchant Navy and that there is increasingly national concern about the decline in, and even the collapse of, this industry.
One newspaper recently published interesting figures about the size of individual companies. My father worked for P and O before the war, when I remember that it had more than 200 ships. That was a long time ago, but today P and O has just 24 ships. Furness Withy has 13 ships, Ellermans six, and British and Commonwealth only four. I appreciate that some of these companies are also members of container consortia, but these figures represent a staggering reduction in the British fleet. It is right that the House should debate this subject today, and I join in the congratulations to my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on choosing it.
Other hon. Members have referred to the reasons for this decline, one of which is the fall in coastal trade. Coastal traffic has practically ceased as a means of communication. In the days when the hon. Member for Wallsend (Mr. Garrett) and I were at school, the Tyne was crowded with colliers taking coal to the south. Nowadays that coal goes to power stations near the collieries and is conveyed by electric line to the south of the country.
Britain now trades far more with Europe, and consequently less of our home trade is taken on long-distance journeys by sea. Less oil is now brought into the country from overseas. Every 1 million tonnes of additional output from the North sea means that one tanker fewer is required. Some tankers are still needed to carry oil from some of the wells to the ports, but the oil also comes ashore by pipeline, and we should contrast the demand for tankers to bring the oil ashore from a few miles out in the North sea with the demand required to bring it around Africa from the Gulf. That sector has also witnessed a great fall in demand.
Container ships are now being made more efficient than the ships they replaced. As well as being larger, each spends only a short time in port. In the old days the ships spent a long time in port, but those days have gone because container ships unload in 24 hours and are off again. One such ship now does the job of seven or eight of its predecessors.
The world depression has also had an effect on our trading situation. The first effect was on the tanker industry, when a flood of cheap ships from the low-wage shipyards of the far east were bought up in vast numbers. Having destroyed the tanker market, those shipyards began to construct bulk carriers, with the result that that sector was also destroyed. We have heard earlier in the debate about the way in which the container business is in turn about to be affected by a vast over-expansion in the number of container ships. Huge fleets of new container ships are ready to come into service in the near future, and one of the sectors that is still doing quite well will be badly affected.
World trade by sea has grown by 28 per cent. in 14 years, but in that time the tonnage of ships available to carry the trade has more than doubled. That has had an appalling effect on freight rates, which are now lower than six years ago. While 1984 was a bad year for world shipping, and for western shipping in particular, it looks as though 1985 will follow the same sad pattern.
Several hon. Members have referred to the defence implications of the Merchant Navy, and it is on that that I wish to concentrate. The developments in the Falkland Islands a couple of years ago dramatically focused attention on the requirements for the Merchant Navy. There is, however, a danger that as time passes we shall lose impetus. It is, therefore, with relief that I congratulate my right hon. Friend and his colleagues in the Ministry of Defence on setting up an inquiry into the adequacy of the Merchant Navy in a war or crisis. I hope that that inquiry will investigate "out of NATO area" operations as well as operations in the north Atlantic. Should some terrible circumstances again require Britain to act alone—God forbid that it will ever happen—we shall have to look to our own resources. We shall be unable to count on our NATO allies in that situation.
During the Falklands crisis, 20 product tankers were sent south to support the Royal Navy. At that time, BP had 25 or 30 such ships in its fleet. I understand that now it has only eight, far fewer than would be needed to support another Falkland Islands operation. There has been a particularly critical fall in the number of specialist ships.
Some figures about shipping requirements in the event of a crisis in Europe are freely available in America—though not perhaps in this country. I understand that 1·5 million men would be flown across the Atlantic, but their equipment would have to come by sea. Further, 8·5

million tonnes of stores plus 10 million tonnes of fuel would have to be brought across the Atlantic. That would require 2,000 shiploads a month. On top of that, a similiar requirement would be needed to maintain the civilian and industrial life of Europe. These are enormous figures, and it is right that the Government should now be inquiring into the continuing capability of the Merchant Navy to play its part in dealing with such a crisis.
Manning would be a particular problem in a crisis. The number of our people at sea has nearly halved in the last 10 years, and is falling at the rate of about 5,000 a year from its present level of 41,000. As we have heard, the number of cadets recruited is also causing great concern. At one time, 1,000 cadets a year were recruited, but it is now a fraction of that number. Therefore, we shall be unable to produce the officers of the future.
It is no good having ships available under flags of convenience which could be requisitioned at a time of crisis if there is no one to man them. It could well be that the existing foreign crews would refuse to sail into particularly hazardous waters, and we might have to rely on our own sailors.
Given the present state of oversupply, with 1,400 surplus ships laid up in the world's ports, it is easy to acquire a second-hand ship cheaply. It is therefore important to do everything we can to maintain the safety of international shipping operations. I very much welcome the recent increase in the number of port inspections. There are now about 10,000 inspections a year, and the need for them is highlighted by the fact that well over 13,000 defects were discovered. No fewer than 430 ships inspected were detained or delayed because they had serious deficiencies. That was 6 per cent. of all the ships inspected. Clearly, that effort needs to be maintained.
The main cause of the problems in the British Merchant Navy is the protectionism of the developing world, which uses its own fleets to gain hard currency and to develop an industry. Those countries gain great advantage from their cheap labour. There is no doubt that this will be a permanent problem for Britain and the other western ship-owning countries. The same applies to much of manufacturing industry, but the problem is highlighted at sea.
Recently I spoke to the manager of a foreign-owned company which still operates from London. On ships registered under the Red Ensign, crew costs account for two thirds of the income, while on ships registered in Liberia or one of the other flags of convenience countries the crew costs account for only one third of the income. That kind of difference highlights the great problems when operating under the Red Ensign, as we all wish.
Turning to specialist ships, the difference in crew costs is not so much a factor. Crewing costs can be the least of the requirements when providing a complex service, whether it be container ships, gas carriers or other specialist vessels. Countries such as Britain are still able to compete in providing ships of that kind.
What can we do for the future? We can try to be more efficient. We can cut crews. I do not believe that this will in itself solve the problem, but we have to do all we can to be as efficient as possible. In recent years there have been quite dramatic falls in the size of crews. A ship which a few years ago had a crew of about 60 has been replaced by a ship with a crew of 31. That in turn will be replaced by ships which are now being built for crews of about 21. Japan is talking seriously about operating large ships with


crews as low as 12. Technology will bring further changes in the manning of ships. However, that will not deal with the magnitude of the problems that have been outlined in the debate.
If I may deal with subsidies, I do not believe that British shipowners seek to be subsidised. However, they say with great justification that they are at a disadvantage compared with other western operators and even more with the countries of the eastern bloc which pay no regard to normal commercial factors. I trust that my hon. Friend the Under-Secretary of State for Transport will refer in his winding-up speech to the discussions that have taken place with the Soviet Union on the passenger cruise liner sector of the industry, which has been so harmed by competition from the non-profitmaking, subsidised Soviet merchant navy, the size of which has been so well portrayed by my right hon. Friend the Member for Taunton (Mr. du Cann) who, again, made a strong case for the Merchant Navy.
What can we do to provide our shipowners with at last the same financial assistance as is given by their western competitors? I support fully what has been said about the negative nature of the Budget changes that have been made this year and the suggestion made by the GCBS that the fleet should be allowed, in addition to the 25 per cent. writing-down allowance, a 50 per cent. ship allowance for new and second-hand ships. Nothing less than that will encourage the investment that is so desperately needed.
The hon. Member for Wallsend referred to the fact that he and I have been invited to go on board Atlantic Conveyor later this week. It is sad indeed that we should these days be talking about individual new ships, not fleets of ships. One ship today is a great achievement for both the shipbuilders and the shipowners of Britain. It is indeed tragic that when Atlantic Conveyor sails there will not, for the first time in centuries, be a merchant ship being built on the Tyne. We must do everything we can to encourage shipowners to continue to invest. The financial state of their industry is so bad that they cannot invest without tax relief. If they are not asking for operating subsidies they should at least be given tax relief. The lack of incentive and of help to our shipowners makes Britain unique. It needs to be put right.
I come to the problems of navigation, and the ports around our coasts. They have the greatest effect upon the British Merchant Navy since it is the British Merchant Navy that uses our ports most. Pilotage is a matter that deserves a separate debate. I welcome the recent publication of a Green Paper on that difficult subject. Ships coming to this country can be charged £12,000 for light dues, whereas if they go to continental ports they pay nothing at all. This leads to ships avoiding Great Britain and to traffic being diverted from our ports to western European ports, with goods being brought on to Britain on cross-Channel ferries. This results in a further adverse effect upon our deep-sea shipping fleet.
I was at Southampton recently. It was a sad sight. That great port has eight container channels. Not one container was to be seen there. The whole trade of the port has gone. While that is harmful to Britain and surely disastrous for Southampton, it must certainly also be bad for the British Merchant Navy if ports of that magnitude are closed down by the lunatic action of the labour force. I say to my hon. Friend the Under-Secretary of State for Transport that the

dock work labour scheme must be given further attention by the Government in the interests of those who work in the industry as much as of those in the Merchant Navy.
One of the problems is the lack of co-ordiation between Ministries. That is not through any lack of goodwill or intent. It is just the result of the history of Government in this country. I do not believe it to be sensible that the vital question of labour relations in the ports should not be handled by the same Ministry as deals with the Merchant Navy.
The efficiency of ships can be helped by improvements in fuel efficiency and design. I welcome the efficient ship project, which the Government are supporting, but I repeat that there will be no investment in new ships unless there are Budget changes. The inadequacies of the present system must be put right in the next Budget.
I believe that this will not be the end of the matter for this House. A maritime league has been formed in this country, consisting of eminent people who deal with every aspect of maritime life. It will continue the battle for the Merchant Navy. There is a maritime affairs committee in the House. It is on an all-party basis and is chaired admirably by my right hon. Friend the Member for Taunton. It will not go away, either.
I am sure that we shall return to this subject. The message that has to go out from our debate today is that as a first step the Treasury must accept the need to give assistance in the next Budget to our shipowners. It is absolutely vital that this message should be taken on board.

Mr. Stephen Ross: I am pleased to follow the hon. Members for Tynemouth (Mr. Trotter) and for Wallsend (Mr. Garrett), because I know a little about the technical college which trains Merchant Navy officers and personnel at South Shields. Until recently my daughter taught there. She conveyed to me the depressing nature of the rundown in numbers and the virtual closure of that college, which has played such a great role over many years.
I, too, congratulate the hon. Member for Romsey and Waterside (Mr. Colvin) on choosing this subject for debate. It is important that we should discuss these matters—in particular the dramatic decline in the strength of our Merchant Navy and the continual rundown of our shipyards.
As has been mentioned, since 1975 the number of ships in our merchant fleet has more than halved. The number has gone down from 1,600 to only 700. Between 1977 and 1980 about 24,000 jobs were shed in British shipyards, and many more have disappeared since then. More shipyards have been closed and there have been continual lay-offs. A great number of lay-offs are taking place at the moment, not only in the north-east, but in Southampton, at Vosper Thornycroft, a very modern shipyard which I believe should never have been nationalised. No new orders at all were received by British shipyards between July and September.
However, I welcome, as I am sure the hon. Member for Fermanagh and South Tyrone (Mr. Maginnis) also welcomes, the recent order which has been placed by British Steel for a bulk carrier at Harland and Wolff. My inspection of Harland and Wolff leads me to believe that


it is as superbly equipped a shipyard as any in the Western world. That at least is one piece of good news. Every effort must be made to keep Harland and Wolff in operation.
Fiscal measures relating to taxation would help the shipowners of this country. I shall not repeat what has already been said. I support the GCBS proposal for a 50 per cent. ship allowance, not only for new but for secondhand vessels.
The "British Shipping Review 1984" says that Norway, Denmark and Japan provide extended periods of finance for up to 10 or 12 years, with initial grace periods of two to three years. While those schemes may have been devised to help domestic shipbuilders, obviously British shipowners have had some benefit from that. There is a host of examples of the sort of help given in West Germany, the Netherlands and many other parts of the world.
Does this country really want to opt out of owning a merchant fleet or building any more ships? Some operators in the City believe that we cannot compete and that, therefore, we should order all our ships from Taiwan—I have seen the very impressive shipyard there—Japan or Korea and perhaps merely fit out ships in this country.
That view was put to me by a City shipowner— I shall not name him—when I suggested where he might order his new ferry. The Under-Secretary may guess where it will be operating to and from. The Robb Caledon yard had just closed, and it seemed to me that such an order would be a great opportunity to reopen the yard. He said that I must be mad if I thought that he could get a ship built on competitive terms in a British yard. He said that the order would go perhaps to Scandinavia, but probably to the far east and that all that a British yard could do would be to fit out the ship.
That view is far too defeatist and must be resisted. The Government must help. I welcome the establishment of the all-party maritime affairs committee under the distinguished chairmanship of the right hon. Member for Taunton (Mr. du Cann), who spoke so knowledgably earlier. However, we are late on the scene. As a member of the committee, I pledge that we shall maintain the pressure until we see an upturn in our merchant fleet.
I congratulate the Government on facing reality in their Green Paper on maritime pilotage. That remark will probably not go down too well in my constituency, because a number of pilots live there, but the Government cannot opt out of the compensatory redundancy payments that will inevitably arise. The Green Paper says:
The Government propose that as a matter of mechanics the cost of the scheme should be met from a levy on harbour authorities, which would be recoverable from a special charge on shipowners.
We made a previous attempt to get some sense into pilotage, and it was accepted that 600 or more pilots might be made redundant. At that time, it was thought that redundancy payments would average about £80,000 per pilot. The shipowners said that they could not meet such sums, and it is hardly likely that they will be able to do so today when the situation is so much worse. There is a case for what the Government have set out in the Green Paper. However, the terms will have to be generous if we are to get a sensible settlement. A three-way split between the state, port authorities and shipowners is surely the right way forward.
Like other hon. Members, I am depressed by what I have seen across the water from my constituency, in

Southampton. The actions of some dockyard workers and their colleagues in that port are, as was said earlier, sheer lunacy. They have put in jeopardy the jobs of too many innocent bystanders, whose livelihoods depend on a vigorous, modern, well-run port complex. Many Southampton operators have moved to Felixstowe, and one has even gone back to Liverpool. Perhaps we should give a cheer for Liverpool, but if Southampton has put itself in the same league as Liverpool, I deeply regret it.
Southampton has all the advantages: excellent facilities, four tides a day, and so on. Regrettably, the workers have committed suicide, and they have taken many pilots, tug owners and launch supply operators with them. That has had an effect in my constituency. Even taxi drivers in Southampton complain bitterly. The whole economy of Southampton has been affected.
A new attitude is required if we are to put matters right. We need a competitive port with a sustained record of industrial peace. Otherwise, shipowners from abroad will not come to our ports. We need to make proper use of modern technology and end overmanning, though with adequate redundancy terms.
As has been said repeatedly in the debate, we need the Government to provide a more sympathetic tax regime and financial help over the next few years similar to that which is so readily available to our competitors. We want fewer crippling charges imposed on shipowners and a determined effort to encourage people to buy British and to repair ships in British yards.
I tried today to get a copy of the evidence given to the Select Committee on Defence by the Under-Secretary of State for Transport, but I gather that it has not yet been published, so we cannot read what was said. The hon. Gentleman was dealing with the role of the merchant fleet in support of the Royal Navy in times of crisis, and what I have heard secondhand is not reassuring. Therefore, I hope that the Under-Secretary will say more about the issue when he replies to the debate.
I welcome the inquiry that is to be set up, but it is far too late. We know what the inquiry will show, and if we wish to save our merchant fleet we must take action now.

Sir David Price: I shall not follow what the hon. Member for Isle of Wight (Mr. Ross) said about the problems of the dock industry in Southampton, though we could have a fruitful debate on that subject alone.
I join other hon. Members in congratulating my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on his success in the ballot and on his choice of subject. It must be clear to my hon. Friend the Under-Secretary of State for Transport that the House is disturbed by the decline in the size and scope of the British merchant marine.
Various figures have been bandied about, but I prefer the simpler and more homely statistic that our fleet has been declining by two ships a week—we have seen the fleet stealing away into the mist—and it is continuing to decline.
Every hon. Member has asked the simple question: is it in the national interest that there should have been such a decline and that the decline should continue? The answer from every hon. Member has been a firm no.
The message from the debate is that, although we all have our own solutions, we agree that in the national interest the present situation must not continue. In saying


that I must declare an interest, because my constituency, which surrounds Southampton and includes a corner of the city, is deeply involved in the shipping industry and I have professional contacts with the industry.
No hon. Member has yet discussed the Government's policy as they have stated it. It has been suggested that the Government do not have a policy but I know that they have one, because it was spelt out to me by my right hon. Friend the Secretary of State for Transport in reply to a question from me earlier this year. My right hon. Friend told me:
The Government will continue to fight strenuously for the widest and fairest possible opportunities for British merchant shipping to compete in the shipping markets of the world. The industry's future will depend mainly on the use it makes of those opportunities, and thus on the enterprise of our shipowners and seafarers. These have always been the main factors in the industry's fortunes."—[Official Report, 9 July 1984; Vol. 63, c. 375.]
How far have the Government succeeded in achieving the laudable objective set out in the first sentence of that answer?
The annual report of the GCBS states:
Non-commercially operated shipping from Soviet bloc countries continues to cause major problems in many important liner trades and in the UK cruise market by grossly undercutting British and other Western operators.
There should be an agreement with the NUS about that. I am sure that Jim Slater would agree that the Soviet bloc has been undercutting.
The report continues:
Moreover, in the liner trades, a deluge of new tonnage is about to fall on the market. Highly subsidised either by the shipowning or shipbuilding country, in some cases operated by companies based in countries which restrict access to their own trades, these ships will operate almost exclusively as cross-traders. Many will be manned and operated from relatively prosperous newly industrialised countries, where trade unions show modest aspirations for their members.
Hence they will have substantial cost advantages over operators from European countries of comparative affluence."
I speak as a former Minister at the Board of Trade, and it is clear to me that that in ordinary language means dumping. We must therefore use some form of antidumping legislation against them. I am without doubt in favour of action. Obviously, the action is better done if we can do it on a European basis. I am glad to tell the House that from my information the Commission of the European Community is well seized of that matter and is well on the way to producing a shipping policy to put before the Council of Ministers. I commend what I have seen of it in draft form.

The Secretary of State for Transport (Mr. Nicholas Ridley): I only wish to say I received it on Wednesday and that I agree.

Sir David Price: When my hon. Friend replies to the debate, I hope that he will support what is being proposed in Brussels. Broadly, the message is that the time has come when we must collectively take action against unfair competition, and that it is better done collectively than individually. Therefore, I hope that the Government will give the new policy their full support.
In the meantime, European countries would be in a better position to take such action if they lived by anti-discrimination within Europe. Many hon. Members, especially my right hon. Friend the Member for Taunton (Mr. du Cann), referred to my efforts this summer to demand action against our so-called partners in Europe for

not allowing free access to their coastal waters. My hon. Friend the Member for Tynemouth (Mr. Trotter) suggested that there had been a great decline in coastal shipping. I remind him that coastal shipping round our own coasts carries in terms of tonne-mileage 2·8 times more freight than is carried by rail. It is second only to transport by road as the main United Kingdom carrier of freight. I commend to the House the figures that I received in reply to a question that I put to my hon. Friend the Parliamentary Under-Secretary of State on 25 June. Coastal shipping is increasing, not declining, largely because of the moving of oil products.

Mr. Trotter: I referred to the 1930s, when there were between 50 and 70 colliers on the Tyne, and at a small port like Blyth between 30 and 40. Now the figures would be two or three for that particular trade.

Sir David Price: There has been an increase in fuel technology, and in those days there were no large coastal refineries. What we have lost in coal we have gained in oil. I repeat that coastal shipping is the second most important method of moving freight around our kingdom.
With regard to the extension of the Community to include Spain and Portugal, if we have free cabotage for British shipping within the EC, the Atlantic ports and the whole of the northern Mediterranean coast will be open to our coastal traders. That would be a great bonus to British coastal shipping. When my hon. Friend replies, I look forward to repeated assurances in addition to those which he has already given me that in the Council of Ministers we shall fight for British rights of coastal access.
I deal next with other forms of appropriate Government aid within the context of free trading and an open seas policy, which the industry and I support. I agree with many of my right hon. and hon. Friends that the Chancellor's measures in the last Budget were not helpful. I hope that some effort will be made to reverse them. It is perfectly legitimate to ask for appropriate tax treatment of capital in the next Budget. The Minister knows that the industry has been making representations about that. I know that this is not the occasion to advance detailed arguments, but I hope that he will give the general idea a fair wind. Similarly, current shipping costs are largely crew and fuel costs. The impact of crew costs can be assisted through favourable taxation treatment. I shall not develop the point further.
My hon. Friend the Member for Tynemouth referred to the problem of lights, and the hon. Member for Isle of Wight commended, as I do, the new proposals on pilotage. However, there is a problem of charges. In a perfect world it is right that the charges should be borne by the industry, but in an imperfect world the industry finds them hard to bear, especially as none of its competitors must bear them. That point is not fully appreciated. The main users of lights are not the merchant fleet, but private yachtsmen. Merchant ships are so well equipped with navigational aids that they need lights less than they did in the past. Therefore, I hope that my hon. Friend will consider further the lights problem.
My hon. Friend the Member for Tynemouth wisely said that the Merchant Navy is the fourth arm of defence. However, both its size and mix are matters for its effective support of the Royal Navy. Even more critical is the time scale of the decline both in absolute terms and in the mix of the fleet. I suspect that the admirals who do their sums


assume that what is on the books now will be on the books in four years' time. However, given the trends that many hon. Members have described to the House, that cannot be a certain assumption.
There is also the question of flagged-out ships which may be under beneficial ownership from this country. There is no certainty whether the crews of those ships will be available in an emergency. That deserves more study than it has so far been given.
Thought should be given to providing some sort of financial arrangements to companies which commit their ships to the Ministry of Defence, similar to that which exists for people — a ship version of the Royal Naval Reserve. There should also be a form of bounty for reserved ships. That would be a legitimate way of giving a little modest help to British shipping companies at this difficult time.
The decline of the British Merchant Navy has reached disturbing proportions. It must be halted and reversed. I invite the Government so to do. Although this is Christmas time, I do not ask the Government to emulate Santa Claus, only to be wise men.

Mr. Don Dixon: I congratulate and thank the hon. Member for Romsey and Waterside (Mr. Colvin) for initiating this important debate. The hon. Member for Tynemouth (Mr. Trotter) talked about the colliers on the river Tyne. I can remember colliers, Blue Star boats, city boats and tankers lying three or four abreast, but now there are virtually no ships to be seen.
My area designs, builds, sails and maintains ships. The Royal Navy cannot be divorced from the merchant fleet, nor the capacity to build and maintain the fleet. I agree with the right hon. Member for Taunton (Mr. du Cann) that we require a maritime policy. We have asked for a maritime policy on many occasions in the House, and the Select Committee on Trade and Industry recommended it in 1981. Britain must be the only maritime nation that has no maritime policy.
I was born in Jarrow, which was a shipbuilding town, and from the day I was born I was meant to work in the shipyards, just as someone born with a silver spoon in his mouth is meant to go to Eton. My grandparents and father were shipyard workers, and I was always being told how important seagoing was. I was told a tale about a Mr. Jenks who used to deliver manure by horse and cart. He did so, despite the arrival of gas turbine motor cars, jet aircraft and spaceships, because he discovered that with his horse and cart he could deliver manure with an economy and a certainty that pleased his customers and repaid him. Manure for the fields of England and food and goods for the rapidly increasing number of under-fed people in the world need neither missiles, spaceships nor jets; just a safe and certain means of transport so that the cost can be kept as low as possible.
If Mr. Jenks' horse became a Pegasus and grew wings, it might be able to lift about 15 lb of books from the Table and carry them through the air. However, if we taught the horse to swim, it could probably tow 50 or 60 hon. Members through the sea. Horse power is extremely important. It is important to realise that it could take 15 lb by air, but 9,000 lb by sea.
The need for a navy stems principally from the possession of a merchant fleet and the need to ensure that merchant ships have unhampered passage through the

world's sea routes. General Galtieri taught Britain a lesson about the importance of surface ships and a merchant fleet; 54 merchant ships were in the task force that went to the Falklands. Everyone, from the Prime Minister upwards, or downwards—it depends how one looks at it—realised the importance of our merchant fleet. Yet, since the Falklands crisis, there has been a reduction of 200 ships in the merchant fleet. During the NATO exercise Operation Lionheart we had to charter foreign vessels.
There has been much publicity recently about the Royal Princess, which was built in Finland. It was a tragedy and a disgrace that British Shipbuilders did not tender for that ship, which is one of the finest passenger ships sailing the oceans.
Many hon. Members have mentioned the fact that the 1984 Budget was a disaster for United Kingdom shipping. The first thing that the Treasury should do is to put that right by introducing 100 per cent. fair share allowances and free depreciation, not by removing the 25 per cent. tax relief for seafarers, as is promised in next year's Budget.
In 1975, the United Kingdom fleet had 1,600 ships and a dead weight tonnage of 50 million. Now it has 700 ships and a dead weight tonnage of 18.5 million. To maintain it at that level would require new orders for 1 million tonnes every year. If new orders for 1 million tonnes were placed in British shipyards, we would not have problems such as we have in the shipbuilding industry. As the hon. Member for Romsey and Waterside said, for the past nine years we have been losing two ships a week. That has happened not simply because of a decline in freight orders, but because of containerisation and the fact that British trading patterns have become increasingly dominated by Europe. For many years I worked on refrigerated vessels that took fruit and meat from Australia, New Zealand and South America, but those ships no longer come to our shores.
When the merchant ships returned from the Falkland Islands bands were playing,
Rule Britannia, Britannia rule the waves.
If the Government do nothing about the decline in the shipping industry we will not even break the waves, let alone rule them.
The hon. Member for Romsey and Waterside, referring to protectionism, said that, while Britain was playing cricket, the rest of the world is engaged in karate. As an ex-boxer, I would say that, while Britain is fighting according to the Marquess of Queensberry's rules, the rest of the world is engaged in all-in wrestling. We do not have an open market. The Government must do something about the decline in shipping, shipbuilding and engine-building industries, which are important to an island nation. In a world two thirds of which is covered by water and 98 per cent. of whose trade is carried by sea, it is important that something be done immediately.

The Parliamentary Under-Secretary of State for Transport (Mr. David Mitchell): I am glad to have the opportunity of responding to the motion that was so ably moved by my hon. Friend the Member for Romsey and Waterside (Mr. Colvin). In the terms of his motion, he recognises the importance of shipping to our trade and our defence, and the importance of our fleet in its own right. I agree with him. It is overlong since the House gave time to this important industry. It is perhaps surprising that the Opposition have not chosen the indusry as the subject of


an Opposition debate, so I am doubly grateful to my hon. Friend for choosing this subject. The motion follows his recent valuable contribution to the debate about the future of the United Kingdom merchant marine in the document produced by the Centre for Policy Studies entitled, "British Shipping — the Right Course." The hon. Member for Wigan (Mr. Stott) paid tribute to that document, although he did not agree with everything that it said.
The Government naturally share the concern expressed in the debate by hon. Members on both sides of the House about the decline of the United Kingdom merchant fleet. It has been a cause of understandable concern to me and my colleagues, as I know it has been to seafarers and their unions, the shipowners, the General Council of British Shipping, and to others concerned with our island's interests and our maritime history.
The decline in the merchant fleet looks especially dramatic if it is measured against the exceptionally high figure to which the fleet had grown in 1975. It may be useful to the House if I restate some basic facts about our fleet. Its high reputation, the skills that are brought to bear by the officers and men who man our ships, and the high calibre of the ships are all known and give us a world-wide reputation. But it is perhaps sometimes overlooked that, despite the decline, the United Kingdom fleet is the seventh largest in the world. That puts us well above our natural position in relation to our total trade. Among European fleets we rank as third, and within the EC as second. Therefore, although I recognise fully the deep concern which the Government share about the decline in the fleet, it is right to put it in perspective.
My hon. Friend the Member for Romsey and Waterside was right to draw attention to the various roles in which the merchant fleet is involved. It is clear from the debate that the House shares his anxiety in three areas: first, in terms of enabling us to carry on our import and export trades where we are so dependent on the sea and ships for bringing in and taking out so much of our trade; secondly, the vital area of defence, which several hon. Members mentioned; and, thirdly, the realisation that the United Kingdom fleet is a major national asset, a major investment, a source of jobs and an industry in its own right.
Perhaps I may mention the projections about the rate of decline of the United Kingdom fleet. My hon. Friend the Member for Romsey and Waterside referred to projections that would lead to the fleet's being extinguished. The General Council of British Shipping has suggested that the 700 vessels which now form the United Kingdom-owned and registered fleet will have fallen to 400 by 1986. Others, further projecting the current rate of decline, declare that by the year 2000 there will be no United Kingdom fleet. Even the hon. Member for Wigan who spoke on behalf of the Opposition, referred to the time when there would be no fleet left. It is far too simplistic just to extrapolate the recent level of the decline and suggest that there is an inevitable progression to the sort of figures that have been spoken about. I do not demur from the concern expressed by my right hon. Friend the Member for Taunton (Mr. du Cann) about this matter. He is chairman of the all-party maritime group, and I hope that we can have discussions about this matter.
My hon. Friend the Member for the Isle of Wight (Mr. Ross) will know that I am not responsible for shipbuilding. However, does he not recognise some inconsistency when he complains about uneconomic freight rates, because of the glut of shipping, in the same breath as he calls for subsidies for shipyards to build more ships, even in his constituency? The truth is that the fleet is not a single fleet; it is many separate fleets. For the House to judge the seriousness of the decline, where it comes, where the shoe is to pinch and what the causes are, we need to look more closely at the different mini-fleets that make up the total of the United Kingdom merchant marine against the background of the changes in our pattern of trade, which themselves lead to a different demand pattern for our fleets. For example, the change to membership of the Common Market has meant that a much larger proportion of our trade is no longer long distance, to the Commonwealth, but is on short haul from the east coast to European ports.
I commend to the House the analysis of the reasons for the decline given by my hon. Friend the Member for the Isle of Wight. He analysed brilliantly, as one might have expected from his experience of the industry, what is going on. He said that seven or eight ships of the old fleet are now replaced by one container vessel. That is one of the many signs of the extent to which there are forces at work that are not within the control of any Government and that are leading to a decline in the number of vessels.
The development of containerisation has meant fewer and larger ships with smaller crews, and the oil crisis of a decade ago has had a dramatic effect on the pattern of the oil trade. For example, 55 per cent. of all the tonnage lost over the last decade—the largest proportion of all reductions in the United Kingdom merchant marine—has been in tanker tonnage. That has not been through any failure on the part of the Labour party when it was in government or of this Government. Principally, the tonnage has fallen because the world trade in oil shrank with high prices and we became self-sufficient from North sea oil being brought ashore by pipeline.
The huge surplus of tankers looks as if it may be coming to an end. One can contrast that with what has happened with regard to containers. We have one of the largest container fleets in the world, but Evergreen and United States Lines are proposing giant, round-the-world, minimum stop operations, which will present a huge challenge to our fleet. The prospect of a freight war developing, with massive surplus tonnage, is horrifying. My hon. Friend the Member for Boothferry (Sir P. Bryan) referred to its devastating potential.
I hope that my right hon. Friend the Member for Taunton will accept that there are many complex factors at work in the decline of our fleet. Happily, roll-on/roll-off and ferries are operating in a more buoyant and steady market, which shows that, while the total size of our fleet has declined and some further decline is on the cards, it would be wrong to extrapolate the figures of the past decline and assume that we shall end up with nothing.
The Government's strategy falls into three parts, all of which were referred to by my hon. Friend the Member for Romsey and Waterside. First, there is the need of our island for ships to import and export goods; secondly, there is our defence strategy; and, thirdly, there is the help and encouragement that we can give to our ship operators. The House may expect me to start by saying that we must have a fleet of a given size to be able to carry goods to and


from the United Kingdom, but that is not the case. Our fleet is important because of the jobs and the overseas earnings that it provides in itself. However, in terms of our imports and exports, the important factor, which relates directly to our competitive position and therefore to our national need, is that we should have efficient shipping services, able to get in and out of our ports with the minimum of burdens, to enable our exporters to compete. That is true in the changed pattern of trade, as so much of it lies with Europe. Our principal competitors are in Europe where they have land frontiers, while everything that we have has to be dragged across the sea and through our ports.
In this connection, it is important that we should minimise the burdens that are imposed on our shipping industry and those who use our ports. We have a continuing dialogue with the General Council of British Shipping about the burdens imposed by the Government, and we are seeking to do what we can to minimise them. For example, the cost of lighthouses and buoys around our shores is an expensive burden, amounting to £43 million a year, which is paid by ships using our ports. For some time, shipowners and the Public Accounts Committee have expressed concern as to whether the money was being most effectively spent. I am pleased to be able to tell the House that Trinity House has now invited the Government to nominate four business men to serve on the reformed Lighthouse Board, which has responsibility for this function under Trinity House.

Mr. Jonathan Sayeed: Does my hon. Friend accept that there is a case, in equity, for those charges falling not just on shipowners? My hon. Friend the Member for Eastleigh (Sir D. Price) mentioned that these facilities are used most by yachtsmen, and the whole country benefits from having a safe maritime regime. Is it not possible for this cost to fall on the Exchequer rather than directly on shipowners?

Mr. Mitchell: On the total burden of lighthouse costs, Trinity House will welcome the addition of four distinguished business men on to the Lighthouse Board, which is involved with the administration of the service. That should lead to an assurance to the shipping community that there will be good value for money in the handling of the money that goes into the fund.
My hon. Friend raises a different point, which concerns not the totality of the expenditure, and therefore the totality that would be raised, but the distribution of it as between the commercial shipping, shipping and yachtsmen. We have identified this as a significant problem. There is an apparent unfairness about it. I understand the misgivings that the GCBS has expressed on this matter. We have commissioned a firm of management consultants to look into matter, and I expect to have its report early in the new year. I shall report to the House on what its recommendations are. I hope that my hon. Friend will recognise that that will cover the points that he raised about yachtsmen.

Mr. Donald Stewart: In view of the comparatively small sum involved, and as the whole rescue service is borne by the Royal National Lifeboat Institution, it would be a welcome contribution if the Government would bear the cost of lighthouses and buoys.

Mr. Mitchell: It would be nice for all of us if the Government had a bottomless pit out of which they could

finance endless numbers of goodies. We would not then need to argue late into the night the relevant merits of spending money on kidney machines or lighthouses. However, in many sectors it has long been established that it is right and proper — and in this regard it has happened under all Governments—for the users of the service to pay for it rather than the general taxpayer. If that is a view that the right hon. Gentleman feels should be debated when the report is received from the consultants, I have no doubt that he will initiate an opportunity to do SO.
Another burden is that of pilotage. I welcome the support of the hon. Member for Isle of Wight (Mr. Ross) for our proposals for the reform of pilotage in the United Kingdom. I am also grateful to my hon. Friend the Member for Eastleigh (Sir D. Price) for his support.
Pilotage is another very substantial cost which has to be paid by ships coming to and going from our shores. It is quite right that we should give the highest possible priority to ensuring the safety of vessels coming in and going out of our ports. In a Green Paper that we published at the end of last week, we announced significant changes which will make for a more cost-effective service while in no way endangering the safety of vessels. It will give to the ports responsibility for pilotage as one of the services provided within ports. These proposals are being cautiously welcomed by the General Council of British Shipping and by Trinity House, which sees it as a new challenge as it will be able to tender for the work around our coasts. Concern has been expressed by the pilots themselves, and I look forward to hearing the response of the British Ports Association.
Another burden to which attention has been drawn is the cost of moving ships into the United Kingdom flag. A good deal of work has been done to reduce that cost and to make it possible for vessels to flag-in more easily. But my hon. Friend the Member for Romsey and Waterside referred to further barriers, and I shall be grateful if he will write to me about them so that I can look at them more closely.
A number of the hon. Members drew attention to the tax position of British fleets. I shall ensure that what they said is drawn to the attention of my right hon. Friend the Chancellor of the Exchequer.
My hon. Friend the Member for Romsey and Waterside also asked me about conference loyalty arrangements. We have given much thought to the proposal that the postponed EEC competition regulation should prohibit conferences from enforcing loyalty arrangements in respect of more than 70 per cent. of shippers' custom. In our consideration we have taken account of the many views expressed to us, but I can now announce that we no longer intend to pursue this proposal.
Widespread anxiety has been expressed about our defence needs. I have been asked whether we would ever again be able to mount that which was done at the time of the Falklands in terms of merchant marine support for the Royal Navy. I have been asked about our NATO reinforcement ability and the needs of the Ministry of Defence. The hon. Member for Wigan referred to the cross-party recognition of the importance of these matters. We should seek where we can to ensure that these matters are not unnecessarily involved in the party political dogfight.
There is a continuing dialogue between the Department of Transport and the Ministry of Defence, in which the


latter identifies its needs, and my Department has the task of ensuring that those needs are supplied. At the moment there is no reason to suppose that we are unable to supply those needs in one way or another. But that begs the question about what will happen in the years ahead if the decline in our fleet continues. For this reason, we have obtained from the Ministry of Defence its forecasts of its needs at varying times over the next few years and in 1992. Having its detailed analysis, we are now going out to consultants. A contract has been placed to see whether the vessels required at those forward dates will be available.
Should we find that some years ahead we are unlikely to meet particular needs, various possibilities are open to the Government. We have long-standing plans for collaboration with our NATO partners, and it is possible that they could help. However, it is not simply a question of the United Kingdom-registered fleet being available. In addition to the United Kingdom fleet of about 800 vessels, we have requisitioning powers in respect of 400 vessels registered in our overseas dependencies and 250 further vessels which are flagged out but beneficially owned by the United Kingdom. That makes a total of 1,450 vessels.

Sir David Price: Although they could be requisitioned, will my hon. Friend bear in mind that their crews are not British subjects in the ordinary sense of the word? With the changing policies of some of those countries, it is doubtful whether they would be available.

Mr. Mitchell: I am grateful to my hon. Friend for reminding me of that. I had made a careful note that he and other hon. Members had referred to it as a matter that I must take back and look at more closely with my officials in the Department. I undertake to do that.

Mr. Sayeed: Beneficial ownership has been discussed a number of times. The suggestion is that those 250 ships flagged out but under our beneficial ownership could be used by us. I and many others who understand flagging out believe that that is by no means certain. We doubt whether our Government could get their hands on those ships, because it is not certain that the minority partners would necessarily let our Government get their hands on them or that their crews would want to go to war under the British flag. That being so, it is extremely optimistic to assume that 250 ships that have been flagged out will be available in time of conflict.

Mr. Mitchell: There may be some which are not available. There may be others which are in far off parts of the world and will not be immediately available. But my understanding is that in law we have the power to requisition. However, that does not detract from the perfectly valid point of my hon. Friend the Member for Eastleigh about crewing these ships. I was about to say to him that it is one of the benefits of this overlong delayed debate that hon. Members have been able to draw attention to important matters that we must take in hand.

Mr. Garrett: In Exercise Lionheart last autumn there were huge successes, but one of the failures related to the mobility of our shipping. It was difficult to get the right types of ships for the right vehicles and with the right storage and necessary speed to get them over to mainland Europe. Can the hon. Gentleman assure the House that this matter is receiving serious consideration? In an emergency it would be of vital importance.

Mr. Mitchell: The hon. Gentleman is right, but perhaps I can reassure him about it. In order not to interfere grossly with the holiday traffic and the ferries on their daily commercial routes across the channel, they were not requisitioned. The exercise was conducted using other vessels. But obviously people would not be going abroad on holiday at times of tension.

Mr. Richard Ottaway: My hon. Friend said that the Government did not wish to disrupt holiday traffic. Will he make inquiries to discover how many British shipowners were even approached to see whether their vessels were available. I know of one vessel which was laid up and which would have been perfect for Exercise Lionheart. It could have been used, but the owners were not approached.

Mr. Mitchell: I am grateful to my hon. Friend for raising that matter. I shall make inquiries and write to him. However, against the fact that we required 49 vessels to support the initial Falklands operation, the fear that out of the 1,450 vessels that we have power to lay our hands on we would not be able to find that number does not seem to me to be borne out.
Should shortages emerge in the future, we could purchase ships for addition to the Royal Fleet Auxiliary. There are a number of other options, some of which it would be inappropriate to dwell on here. The aim of the surveys that we have set in hand is to discover whether there will be shortages of specific types of vessel, and I have no wish to prejudge the findings. It would be for us to consider how best to meet any such shortages in specific areas, rather than to do something about the generality of our fleet on defence grounds.
A vital part of the debate related to the huge United Kingdom investment in our fleet, the importance of its overseas earnings and the jobs which it provides. A fundamental choice has to be made between whether we are for protectionism or free trade. Countries will choose whichever of those two policies suits their national needs. There may be some, with a small national fleet which they are ambitious to see grow, which feel that it makes sense to go for cargo reservation and suffer the disadvantage of higher freight rates on their exports. But if, like us, a country has a large fleet—far too large for its national trade—an open market across the world is needed in which to deploy that fleet. We are certainly in that camp, as my hon. Friend the Member for Romsey and Waterside stressed.
Some 58 per cent. of our fleet's earnings come from the cross trades. We must have fair and open markets to provide that opportunity. Indeed, I pray in aid the words of the greatly respected president of the General Council of British Shipping who, on taking up his post, said:
So what should be done? Do we want Government subsidies or protectionism? No, gentlemen, we do not. I believe that is a route which we should only seek to follow if all else fails." I concur with that view.

Dr. David Clark: I have been very patient. I accept the thrust of the Minister's argument, but Norway is an even better example than the United Kingdom in cross trades. How can the hon. Gentleman justify one British vessel in the Norwegian section of the North sea and 48 Norwegian vessels in our section?

Mr. Mitchell: I shall come to that point. I am glad that the hon. Gentleman has raised it.
The hon. Member for Wigan asked about the inspection of substandard vessels. I agree that that is important. We exercise port state control strictly and I have initiated a considerable tightening up of that. It is effective in deterring people from bringing substandard vessels to Britain.
The Department of Transport is engaged, with the help of other Government Departments, in seeking to ensure that the number of markets closed to us is kept to a minimum so that our fleet has the maximum trading opportunities. In terms of value, we reckon that only between 10 and 15 per cent. of total international seaborne trade is now subject to reservation. That is to say, between 85 and 90 per cent. is free, open and available for our ships to operate in. Certainly we keep up constant pressure in one way or another against those who seek to close the markets to us. That is most often successfully achieved by acting in co-operation with other countries. For example, talks have been going on between the United States and the Consultative Shipping Group. Those are designed to hold back the tide of protectionism where it stands today, and to ensure that there is no further creeping protectionism. That can be achieved only by acting together.
The hon. Member for South Shields (Dr. Clark) referred to Norway and the fact that there is only one British vessel operating there. One of the biggest single reasons for that is that Norwegian vessels are not required to take a pilot, but British vessels are. That has two disadvantages. The first is financial. To have to pay £200 on entering and leaving port in a competitive market is not peanuts. Far more important is that an oil rig requiring a supply vessel needs to have it immediately when the weather is right. If a vessel has to wait for a pilot, it will not be much cop as a potential bidder for a contract. Recognising that, at the suggestion of the GCBS I went to Norway and had long and frank discussions with its Minister. He came back here and we completed our discussions. The Norwegians have now waived that requirement in respect of United Kingdom supply vessels operating out of Norwegian ports.
Another important area is the EEC. The time has long passed when it should have developed a shipping policy. There have been enormous benefits to European countries from larger trade in goods as a result of membership. Such a policy should have applied to services in aviation and shipping, and it has not. We have been putting on as much pressure as we possibly can in recent months to try to get it to do just that. My hon. Friend the Member for Eastleigh is right to refer to the importance of that area and of cabotage and all the unfairnesses thrown up from open access to our coastal ports for other European countries while some at least close theirs to our fleet. We cannot with equanimity allow that to continue.
The Commission, under considerable pressure from us, has at last produced its memorandum. We are waiting to see its terms, which I understand were agreed by the Commission last Wednesday. We look forward to pressing the Council of Ministers to bring that policy to a successful conclusion because it will provide fairer trading and competition within Europe.
It is not for the Government to run ships; it is for our shipowners and merchant mariners. They have had a tough task, and I praise them for the way in which they have tackled it. It is the Government's job to seek to ensure fair trading opportunities. On that I am never

satisfied, but we are working on it and more progress has been made than hon. Members may recognise, particularly in relation to a joint response to protectionism by the United States and the OECD countries. I hope that in January we shall sign an agreement committing the signatories to act together against any new protectionist devices which may emerge. We attach importance to early progress on the Commission's memorandum on a shipping policy in Europe and on a competition policy as part of it.
We shall ensure that there are sufficient vessels to enable us to fulfil our defence requirements. There certainly are at present, and forecasts have been made for the years ahead. We have taken steps, such as I have spelt out to the House, to limit the burdens imposed by the Government on vessels using our ports.
I do not claim that the Government have all the answers. There is a considerable pool of wisdom in the House on this subject. It is important that Ministers should listen, and I have done so carefully. I shall consider equally carefully the points that have been made. I again express my gratitude to my hon. Friend the Member for Romsey and Waterside for having introduced the motion.

Mr. Colvin: In the remaining few minutes I want to thank my hon. Friend the Under-Secretary of State for his reply and also to thank those hon. Members who have participated in the debate, a feature of which has been the measure of all-party support for demands to improve the lamentable state of our Merchant Navy, and the awareness of the fact that if the present trend continues and the number of our ships continues to drop Britain will be in dire straits not only from an economic point of view, but from the point of view of our strategic defence.
I was pleased to note that my right hon. Friend the Secretary of State was present during most of the debate. I trust that he has taken copious notes of some of the points that have been made. In particular, I was impressed by what my hon. Friend the Member for Boothferry (Sir P. Bryan) had to say about the way in which some of the bigger companies have pulled out of shipping. That highlights the essence of the problem mentioned by my hon. Friend the Under-Secretary of State in his reply to the debate.
It is not the Government's job to run the shipping industry. It is their job to create the economic climate in which shipowners can prosper. That that climate has not been present of late is the reason for so many companies going out of shipping. I wish that it were possible to see the size of our merchant fleet maintained, but until we change the economic climate and encourage people to come back in, we are on a loser.
With that in mind, I am pleased that the GCBS, in its presentation to the Chancellor, has drawn attention to the need for allowances to be made available on secondhand ships. While we lament the state of the shipbuilding industry, there are nevertheless as many ships now laid up around the world as would constitute the whole output of our shipbuilding industry in one year.
I have no time in which to refer to the other remarks of hon. Members. The motion called on the Government to state their policies on merchant shipping, and my hon.


Friend the Under-Secretary of State has done just that. We may not be satisfied with all his replies, but he has, nevertheless, stated the Government's policies, and I therefore beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.

Merchant Shipping

7 pm

The Parliamentary Under-Secretary of State for Transport (Mr. David Mitchell): I beg to move,
That the draft Merchant Shipping (Liner Conferences) (Mandatory Provisions) Regulations 1984, which were laid before this House on 13th November, be approved.

Mr. Deputy Speaker (Mr. Paul Dean): With this, it will be convenient to discuss the following motion:
That the draft Merchant Shipping (Liner Conferences) (Conditions for Recognition) Regulations 1984, which were laid before this House on 13th November, be approved.

Mr. Mitchell: Hon. Members will remember that in 1982 the Merchant Shipping (Liner Conferences) Act became law. That Act enabled the Secretary of State to make certain regulations whose effect would be essentially to translate the provisions of the UN convention on a code of conduct for the liner conferences into United Kingdom law. The matter is complex, but I think that it is important that I put the situation clearly on the record. Accordingly, I hope that the House will forgive me if I go into some detail.
The purpose of the present regulations therefore is to enable the United Kingdom to accede to that convention. The convention, which came into force in October 1983, embodies a complex and wide-ranging set of rules governing the relations between shipping lines that are members of shipping conferences and between those lines and their customers, the shippers. The application of this code of conduct in the United Kingdom will be significantly modified by EC Regulation No. 954/79, commonly referred to as the Brussels package. I shall have more to say about that later. The United Kingdom intends to accede early in the new year—we hope to do so at the same time as a number of other European countries. That event will constitute a very significant development in international liner shipping and we have not taken this decision without conducting extensive consultations with interested parties. I am glad to be able to tell the House that the United Kingdom's accession to this convention is fully supported by the General Council of British Shipping and the British Shippers Council.
Although the regulations themselves are quite technical in nature — I am sure that the concern that is often expressed in the House about the state of the British shipping industry will be reflected in today's debate—hon. Members would wish me to explain the relevance of the regulations and of the code itself to the wider shipping scene.
I turn to the Government's objectives in liner shipping. The policy of successive British Governments on liner shipping has been governed by our interests both as an exporting nation and as a major shipping nation. Those two national interests continue to point in the same direction. A third of our national income is derived from international trade, and roughly that proportion of our jobs depends on its success. Most of this trade is carried by sea. Any failure to maintain competitive conditions on our shipping routes would clearly result in more expensive and less efficient sea transport, with inevitable consequences for our trade.
Equally, our shipping industry relies on its own ability to compete in maritime trades worldwide. Opinions may well differ as to the most effective method of arresting the


decline of the British flag fleet and what role the Government should play, but one issue on which there is agreement is that it is the Government's task to try to keep the world's shipping markets open to British vessels. Nearly three fifths of the freight earnings of the British shipping industry comes from trading between other countries' ports, and cross-trading earnings represent two fifths of the industry's liner earnings. Free and fair access to cargoes in other countries' ports is therefore vital to the future of the British shipping industry.
I turn to the conference system. The House will know that, in line with the practice of Governments throughout the world, we exempt liner shipping conferences from the provisions of our restrictive practices legislation. We find that liner conferences are generally beneficial in providing reliable scheduled services required by many shippers of different types of cargo. They also help to preserve stable freight rates, although this stability can be threatened when there is an abundance of competition from non-conference lines. The exemption can, of course, only be tenable provided that this competition is present to some degree, or is not prevented from developing; and provided that shippers are effectively organised so as to make their views known to the conferences. In a nutshell, closed conferences are acceptable only as part of an open system.
Thus British industry wants to have access to the regular scheduled liner shipping services provided by the conferences; and a free choice of competing non-conference carriers. British shipping wants to have the widest possible freedom to compete in the world's liner shipping routes, both within and without conferences. The Government's key shipping policy objectives are to ensure that these very reasonable desires of British industry and British shipping can be fulfilled.
But the House will not be surprised to know that a number of developing countries do not share the Government's desire to maintain an open market in liner shipping. They want instead to share cargoes as exclusively as possible between trading partners. It was these pressures for cargo reservation which were a moving force in establishing the UN liner code.
The core of the code is concerned with: first, the relations among conference shipping lines: and, secondly, the relations between conferences and shippers. In dealing with the relations between conferences and shippers, the code states that its objective is to
balance the interests of the suppliers and users of liner shipping services".
The provisions of the code in large measure reflect the practices that have developed internationally in recent years and are, I believe, broadly acceptable to shippers and shipowners alike.
But in dealing with the relationship between conference lines the UN code sought to impose the very kind of rigid cargo-sharing that the Government have so often fought to resist. Article 2 provided that cargo should be divided equally between conference lines of the two countries that were served, leaving other conference lines to carry some 20 per cent. between them. This so-called 40:40:20 division of conference cargoes was unacceptable to the Government and was the main reason why the United Kingdom voted against the code convention at the diplomatic conference which adopted it in 1974.
Hon. Members who specialise in this subject will know that some OECD countries including France, West Germany and Belgium had voted in favour of the code and

other OECD countries had merely abstained. We therefore faced the unhappy prospect that the United Kingdom might be compelled to stand aloof while this new regime was applied without restraint on many of the world's major shipping routes. In that event British shipping lines' cross-trading opportunities would have been severely restricted. I know that hon. Members would be deeply concerned at such a prospect.
Clearly there were, therefore, compelling reasons for OECD countries to adopt a more uniform approach to the code for EC states and, in particular, to agree a common position. That common policy was developed under the last Labour Administration; and the present Government were glad to continue it on behalf of the United Kingdom very soon after we came into office in 1979. The policy is embodied in the Brussels package, which creates directly applicable law in the United Kingdom.
The overall effect of the Community's policy on the code will be that its cargo-sharing provisions will protect the shipping of only those countries, mainly developing countries, that wish them to do so. This is assured by three key provisions. First, when the code applies to a route between a Community member state and a third country, conference lines from all member states will compete on that route on the same footing. Secondly, lines from countries within the OECD which intend to accede to the code will also be able to compete on the same footing provided that they offer reciprocal treatment on routes serving their own countries. Finland, Norway and Sweden have already announced their intention of joining the code and operating it in the same amended way as the United Kingdom and the rest of the EC. Thirdly, the conference shipping lines of other OECD countries such as Australia and the United States of America, which at present do not intend to accede to the code, will also be treated in the Community on the same footing as Community conference lines, so long as those countries do not themselves discriminate against Community shipping. Japan is the only country in the OECD which has indicated an intention of acceding to the UN code without having made clear what kind of reciprocal arrangements will be available, and discussions between the Community and Japan are continuing.
As a result of these fundamental modifications the Department has calculated that the code's cargo-sharing provisions will in practice reserve only cargoes representing between 10 per cent. and 15 per cent. of the world's liner conference trade; the remainder will be free of cargo reservation. I know that the House will welcome that in the light of earlier discussions on dealing with protectionism and access for our ship operators.
As I have mentioned, the code's basic regime concerning the relations between conferences and shippers was altogether more acceptable. The Brussels package contains some modifications to certain of the code's provisions but in the main the provisions which give rights to shippers to be consulted on the basis of full information are welcome.
There are two draft statutory instruments. The first, the mandatory provisions regulations, identifies the code's provisions which are to give rise to rights and duties. The second defines a United Kingdom national shipping line for the purposes of the code and defines those shippers' organisations which will have rights to be consulted.
The Merchant Shipping (Liner Conferences) (Mandatory Provisions) Regulations 1984 implement the


code convention. The code's provisions are a mixture of mandatory and recommendatory provisions, and some of the mandatory provisions are ambiguous. It would not therefore have been possible or desirable to import the code as a whole into our law.
Regulation 2 lays down that these regulations apply to conferences which have their seat in the United Kingdom or serve the trade of the United Kingdom.
Regulation 3 lies at the heart of the statutory instrument and sets out in the form of a table those provisions of the code which are to be mandatory. The table identifies those people by whom and against whom these provisions may be enforced.
I do not believe that this table contains any unexpected or unusual decisions. We have sought to reproduce the code's mandatory provisions as faithfully as possible. Some minor clarifications have been made to ensure that the provisions work effectively and, above all, do not inhibit competition. I shall draw the attention of the House to just two.
First, regulation 2.4 (b) is clarified by stating that the share of cargo available to cross-trading lines is a right to acquire a share by commercial means. We wish to avoid any possibility of a cross-trading line seeking to increase its share simply through legal action.
Secondly, regulation 13.1 (2) is clarified to make it plain that conference lines are entitled to charge rates less than the published tariff. Our objective is again to ensure that this provision does not dampen competition.
Regulation 4 ensures that where any conference is incorporated its individual member lines remain responsible in respect of the duties set out in regulation 3, so far as this lies within their power. Regulation 5 contains minor clarifications to chapter VI of the code which deals with
Provisions and Machinery for the Settlement of Disputes".
The Merchant Shipping (Liner Conferences) (Conditions for Recognition) Regulations 1984 set the conditions for a national shipping line and shippers' organisation.
The code defines a national shipping line, but allows Governments to add further criteria. The code conferred certain privileges on national shipping lines and although these have largely been removed by the Brussels package it is widely acknowledged that national line status will be of some importance. During our consultations with shipowners, shippers and the seafaring unions some suggestions were made which in the Government's view would have imposed unduly restrictive conditions on national shipping lines. Some groups felt that United Kingdom national shipping lines should be British-owned, other groups felt that United Kingdom national shipping lines should be compelled to fly the British flag.
The Government have decided to set criteria to maintain as open a market system as possible for shipping lines operating out of the United Kingdom. Regulation 2 therefore limits national shipping line status only in the following way. Lines will be regarded as national shipping lines only in respect of those conferences of which they are members. And they will have to be of British nationality —which is defined as having their principal place of business in the United Kingdom. The only other limitation

is that lines from countries which would refuse similar treatment for British lines will themselves be excluded. I believe that that is agreeable to the House.
The code also allows Governments to decide who should have the right to take part in consultations with the conferences. Here, our objective has been to ensure that those organisations which already have a key role in representing shippers' interests will have the right to be consulted under the code. We have also been concerned to avoid a position where conferences are obliged to consult so many organisations that the process becomes unmanageable.
There are two avenues available to the Government to determine who should have those consultation rights. The first — and the fundamental one — is to set down the conditions for recognition as a shippers' organisation. The code contains a basic definition of a shippers' organisation and allows Governments to add further conditions. These conditions, set out in regulation 3, are necessarily expressed in broad terms. All those whom we have consulted have argued against a very rigid set of conditions. I hope that the House will agree that we are right to respond to consultation in that way.
Regulation 3 allows one national organisation, which is expected usually to be the British Shippers Council, to claim consultation rights in respect of most if not all conferences subject to the code. In addition, other shippers' organisations may claim consultation rights where they can show that they represent shippers of such quantities of goods with that conference that it is reasonable for them to be consulted. If the conference sought to deny that claim it would be for the conference to show either that the shippers concerned were already adequately represented by recognised shippers' organisations or that there were so many other organisations representing more cargo that recognition would be inappropriate.
We look to both shipowners and shippers to operate the consultation procedure in a constructive fashion. With goodwill on both sides I am sure that the shippers' interests can be effectively and efficiently represented.
The second avenue by which consultation rights may be established is designed to benefit large individual shippers and representatives of shippers. Regulation 5 gives the Secretary of State the power to designate these groups.
As the conditions that we have imposed on shippers' organisations represent something of a compromise between competing claims, I think that it would be right at this stage to state that the Secretary of State would use his powers of designation only in exceptional circumstances. He would adopt criteria in line with those laid down for shippers' organisations. The result would be that when large shippers, or a large number of small shippers, using the same agent, such as a freight forwarder, feel that their interests have not been adequately represented to a particular conference they will be able to seek consultation rights. I think that that is a comprehensive set of guidelines. I am sure that the House will agree.
I would now like to say something about non-conference lines and the code. The diplomatic conference that adopted the code convention also adopted a resolution on non-conference shipping lines which stated that such lines should not be prevented from operating provided that


they competed fairly. But that resolution is not legally binding and the code itself confers no rights on non-conference shipping.
The problem that we face is that there is an increasing disposition among some developing countries to seek to close their shipping trades to non-conference lines and thus establish a monopoly for the conferences. That position would be unacceptable to the British Government on routes serving the United Kingdom.
We have therefore concluded that the United Kingdom's accession will be subject to the condition that the United Kingdom will be bound by the convention only while our trading partners permit non-conference lines to compete in our mutual trades. We shall make a formal reservation along these lines when we come to accede. In the event that non-conference lines were to be excluded by another contracting party the Government would be able to suspend the operation of the code using section 4 of the enabling Act and would thus be free to use the wide-ranging retaliatory powers contained in section 14 of the Merchant Shipping Act 1974. We have discussed our intention with our Community partners and we understand that other OECD Governments are likely to make similar reservations when they accede.
Finally, let me just touch on other current initiatives in liner shipping with which the Government are closely involved. I have explained that the Brussels package ensures that the OECD's ground rules concerning competition in the provision of liner shipping services are fully respected. But there is clearly a need for the OECD countries to continue to develop unambiguous and positive policies to promote their interests in liner shipping, particularly as more countries come to accede to the code.
I have referred already to the EEC regulations and the United States—Consultative Shipping Group dialogue, so I shall not refer to that again. I have sought to set out the Government's objectives in pursuing the interests of British shipping and its customers. The code, together with the Brussels package, is an attempt—some would say a very ambitious attempt — to reconcile quite different and potentially conflicting aims. But the alternative would have been a series of unilateral or, perhaps, regional initiatives taken by each sovereign state attempting to impose its preferred solutions on the shipping lines of its trading partners. Interference of that sort would have led to inefficiency, increased costs for shipping lines and, not least, the threat of very real disruption to shipping and trading operations where disputes could not be resolved.
The British Government recognise that the code represents something of a challenge and we have equipped ourselves with appropriate defensive powers if things go wrong. We shall do our best to make the code work effectively because we believe it holds out the best prospects for the stable development of liner shipping and that, of the options available, it represents the best course for British shipping and for British industry at large.
I have spoken at some length. It is a complex matter and it is right to put on record exactly what is involved in this important step for our shipping interests. I commend the regulations to the House.

Mr. Roger Stott: During the excellent preceding debate hon. Members from both sides of the House made it absolutely clear to the Government that

action to arrest the critical decline of our merchant fleet is required immediately. We must judge these regulations, tortuous though they may be, in the light of that criterion.
On the matter of the Brussels package, we have reached the stage when we must question whether it is in the best interests of the United Kingdom to continue to support it. Continued support makes sense only when the United Kingdom's earnings through cross trade exceeds the earnings that could be made from carrying 40 per cent. of our liner imports and exports. Clearly, that position has not yet been reached. However, the changes between 1979 and 1982 show the way in which matters are moving. Great change is taking place. The position is not quite what the Minister alleged. Serious changes are occuring and we must consider whether the package is acceptable to us.
The second set of regulations deal with the national shipping lines. They do not provide adequate defence for the United Kingdom shipping interests, and that applies especially to the definition of a national shipping line. Neither ownership nor the registration of vessels is taken into account to the extent that national line status can be accorded even if ownership and registration are outside the United Kingdom.
While regulation 2(3)—the conditions for recognition —has been included because of EEC regulation 954/79, the Government have not reconsidered that regulation in the light of the changed circumstances of United Kingdom shipping. The decline in the United Kingdom's liner trade calls for the regulation to be amended so that national line status is accorded only to companies with ownership and registration within the United Kingdom. However, recognising the existence of the EEC regulation, national line status could be accorded only to companies using vessels registered in the United Kingdom or in other member states.
Regulations 2(1), (2) and (3) give national line status to existing members of liner conferences. Even if they use non-United Kingdom flag ships with non-United Kingdom crews, such status can be retained by the conference members. For example, a Swiss-owned Liberian flag of convenience ship with a Singaporean or Filipino crew could still be used by a company with national line status. That really makes nonsense of the definition of a national shipping line.
The requirement that reciprocal arrangements exist for a foreign-owned company to receive national line status in the United Kingdom provides some attempt to protect our interests, but it is the very narrow interest of owners, because United Kingdom companies establishing subsidiaries abroad would be using foreign ships and labour, with no benefit to United Kingdom seafarers or to the nation as a whole.
The regulations are clearly aimed at the Comecon countries, because they are regarded as operating unfairly, and I subscribe to that view, but there is no attempt to act against flag-of-convenience operations, which are just as unfair and are a greater threat to British shipping. Overall, the regulations will not help to protect United Kingdom shipping. They will not secure existing operations or promote further opportunities.
I shall not ask my hon. Friends—if they are still around—to divide the House. I merely wish to point out to the Minister that some of us are greatly upset by the regulations. We do not believe that they will in any way deal with the very grave position facing British shipping.
The Government are in the process of undertaking a review of shipping. The Minister of State for the Armed Forces is studying the whole question, but it is limited to the defence requirements for merchant shipping and the capability of the fleet to meet those requirements. The Under-Secretary of State, in answer to a question on 10 December, at column 304 of the Official Report, said that the review would take into account only vessels and not manpower, nor the economic necessities of maintaining a merchant fleet. I hope that the Minister will take that point on board.
I wish to crave your indulgence for a moment, Mr. Deputy Speaker, as I may stray slightly outside the motion. However, I believe that an important matter should be put on the record. The Minister must ensure that the consultants whom he has engaged to consider the matter also consider manpower. He will know from the questions asked by his hon. Friend the Member for Eastleigh (Sir. D. Price) that manpower is important, especially if there is another Falklands-type conflict, where ships that are flagged out may be brought back into Britain, but their crews may not.
In the light of the disastrous state of British shipping and the dire prospects for United Kingdom companies, the Government should undertake a major review of the industry. It is 14 years since Lord Rochdale made his major report on shipping, and a great deal has changed since then. In fact, the Government's lack of concern and their inactivity have condoned the worst decline in our merchant fleet in our history. It is time that we did something about that.
I shall not rehearse the arguments that I used in the previous debate. I am sure that the Minister is well aware of the feeling of hon. Members on both sides of the House about this great industry. I am sure that he is also well aware that something must be done quickly to arrest that decline. I do not believe that the regulations will go any way towards that. Much more positive action is required.

Mr. Michael Shersby: First, I must declare an interest as I am associated with an organisation which is a member of the British Federation of Commodity Associations.
Regulation 2 is headed:
National Shipping Lines of the United Kingdom".
I recognise the necessity for the regulation where there is a definition of a national shipping line. The United Nations liner code enables developing countries to participate in liner conference trade by virtue of having the right to carry in vessels of their national lines about 40 per cent. of the goods generated by trade between them. The countries at the other end would also have about 40 per cent. The remaining 20 per cent. of trade can be acquired by vessels of third countries. That is the so-called 40:40:20 rule.
If my hon. Friend the Under-Secretary of State has read the Second Reading debate on the 1982 Bill, as it then was, he will understand that I have always been opposed to the United Nations liner code, which led to the Merchant Shipping (Liner Conferences) Act 1982. I have opposed it because of its impression and the opportunity which it has afforded to less scrupulous countries to abuse

normal commercial practices and to take refuge for their action behind the code. I spoke at length on these matters when the 1982 Bill was being considered in Committee.
I was interested to hear my hon. Friend the Under-Secretary of State talk about the appropriate defensive powers that the Government have taken if things go wrong. I cannot help feeling that I have been reinforced in the view that I took in 1982, that the whole of this bureaucratic and cumbersome apparatus is very much the best of a bad job. My hon. Friend spoke about the problems that would have ensued if we had not decided to adhere to the code. He reminded the House of the difficulties that might have arisen if countries had pursued their separate interests. None the less, I am filled with gloom as I hear once again a description of the way in which the proposed apparatus will work.
I remind the hon. Member for Wigan (Mr. Stott) of what was said in the House on 9 June 1978 by the then hon. Member for Hackney, Central, Mr. Stanley Clinton Davis:
But much of the current support for the United Nations code derives from the desire of certain developed countries to increase their share of liner trades by cargo reservation, since it appears that they cannot win a greater share by commercial means. I see no reason why we should encourage any move at all in this direction."—[Official Report, 9 June 1978; Vol. 951, c. 610.]
I am glad that after a considerable period my hon. Friend has tabled the regulations, which seek to define important matters. In regulation 2(2) we have a clear definition of a shipping line of British nationality. In regulation 2(3) recognition of a shipping line as being of British nationality is accorded to shipping lines of member states of the EEC. I understand that that provision will operate reciprocally within the Community. However, in regulations 2(4) and 2(5) recognition as a national shipping line of the United Kingdom is accorded to lines of states outside the EEC under certain conditions. In regulation 2(4) there is a requirement for an effective opportunity to ply for trade, and in regulation 2(5) there are requirements relating to the percentage of share capital and directors. Those conditions may be subject to change—possibly to sudden change. For example, the opportunity to ply for trade could be restricted. The percentage of shareholders could change, and so could the number of directors. I should like to know what steps my hon. Friend proposes to take to ensure that when a decision has been made on such conditions there will be a system of monitoring to ensure that the conditions on which the decision was taken are retained.
I have always been worried that the code is vague and imprecise. I understand the problem of drafting regulations that result from a code that has been internationally criticised for being vague and imprecise. However, Britain decided to adopt the code, and it has taken seriously the subsequent legislation. It has attempted to make as good a job of it as possible. I ask my hon. Friend to set before the House the evidence he has that the issue is being taken equally seriously by other code states and that they are taking the necessary steps to draft legislation, especially the developing countries which have adopted the code. Unless all signatories to the code apply equally strict conditions, there is a danger that the code will not work.
Regulation 3 is headed "Shippers' Organisations". In regulation 3(2)(b) there is the right for shippers' organisations to be consulted by the conference under certain conditions. The conference is given the opportunity of saying under regulation 3(2)(b)(ii)
that it would not be appropriate to consult".


In the debates that took place prior to the 1982 Act, I strongly represented the views of shippers of raw materials which were members of the British Federation of Commodity Associations. The commodities that are traded through London rarely reach the shores of the United Kingdom. The majority of them pass between third countries. However, the commission earned by London trading houses on such transactions is an important part of our invisible earnings. The commodity trades, according to the latest statistics that are available, earned £350 million in invisibles in 1983. The trade associations of London, which cover commodities such as sugar, cocoa, non-ferrous metals and rubber, may have problems from time to time with the carriage of their commodities by liner conference which they will need to discuss with the conferences. It is astonishing that the regulations should contain a proviso that might enable any conference to refuse such consultation on the ground that the quantities carried were not large enough or that the trade concerned belonged to a larger shippers' organisation, such as the British Shippers Council.
When there are real problems it is essential that the trade should be able to consult directly with the conference. It should not have to consult any other organisation, unless it wishes to do so. Representations have been made to my hon. Friend the Minister on this issue and I hope that he will be able to give some assurance when he replies that it is not his intention to deprive any trade of the opportunity of full consultation when a genuine problem arises.
This is the first piece of Government legislation that I have opposed at all stages with both voice and vote. When historians come to plot the decline of the British merchant marine, I hope that one of them will read the proceedings in Standing Committee during April 1982 and possibly the report of this debate. I hope that it will be noted that at least one Member of this place expressed serious reservations and surprise that the British Government found it necessary to accede to the proposal.

Dr. David Clark: I take up the rather sombre tone of the hon. Member for Uxbridge (Mr. Shersby), who has argued in the same vein for a number of years. Like many who spoke in the previous debate on merchant shipping, I have no direct financial interest. However, I represent a constituency that contains one of the four designated nautical colleges. As we heard from the hon. Member for Isle of Wight (Mr. Ross) in the previous debate, the colleges are under threat of closure. As the hon. Member for Wallsend (Mr. Garrett) said in the previous debate, my constituency is a town which lost more merchant seamen in the past two wars than any other. My constituency contains the largest branch of the National Union of Seamen in the north of England and the general secretary of the NUS comes from my constituency. My constituency is based on Tyne Dock. As I have said, I have no financial interest but I have a great interest in the maritime industry.
It is with great sadness that I take part in this debate, especially in view of the earlier speech on the motion and the introduction to these regulations by the Under-Secretary of State. There is great resentment in my constituency about the way in which the Government have let down the Merchant Navy. These regulations are not a step forward. The Under-Secretary of State took 35

minutes to wind up in a three-hour debate, thereby preventing me from making a speech, and that can only add to the resentment.

Mr. David Mitchell: Will the hon. Gentleman give way?

Dr. Clark: I shall not give way. The hon. Gentleman spoke for 35 minutes in the previous debate and gave a long introduction to this debate. He will have a chance to make his point when winding up.
The Under-Secretary of State talked about the Brussels package. I hope that all hon. Members wish the new commissioner in charge of transport, Stanley Clinton Davis, well in his task. I deplore the scurrilous attacks made on him and his colleague, Lord Cockfield, by the leader of the Liberal party when in Brussels. It was disgraceful to make such attacks on two first-class men. We wish Stanley Clinton Davis well in his efforts to grapple with the problem connected with the Brussels package.
The Under-Secretary of State said that our maritime ability will depend upon our industry's ability. As we argued for three hours in the previous debate, this has nothing to do with the industry's ability—it has to do with the fiscal measures that the Government are prepared to take to help the maritime industry to survive. I am sad that the Under-Secretary of State was not able to pick up that point, which was made ferociously by both sides of the House. I hope that the hon. Gentleman will take that message back to the Chancellor of the Exchequer and say how unfair the Government's decisions in the last Budget were in reducing the overseas earnings allowance of seamen. That measure will increase the cost of the wages of the British shipping industry. It will give the lie to the point made by the Under-Secretary of State that our maritime ability depends upon the industry's ability. The Government have shown no incentive in trying to help the merchant shipping industry.
About 22 minutes ago, the Under-Secretary of State assured us that the purpose of the regulations and his policy was to protect British shipping. That is not how the shipping industry sees it. The hon. Gentleman responded by referring to the supply ships in the Norwegian section of the North sea. Some months ago, the hon. Gentleman met the responsible Minister, but we are still awaiting developments. The Norwegians operate a bureaucratic system that makes it virtually impossible for British offshore and supply vessels to become involved. It is as simple as that. The Norwegians know that, and they are pulling the wool over the Minister's eyes.
In introducing the regulations, the Under-Secretary of State rightly mentioned many other OECD countries, specifically Norway, Sweden and Denmark. I understand that the British Government are conducting negotiations with the Soviet Government. The British Government propose to preclude any Russian vessels from entering the port of Tyne and the river Tyne. I urge the Under-Secretary of State — he probably does not have the necessary information with him — to look into this matter. We can understand why the Government do not want to let the Russians into Barrow-in-Furness and Rosyth. I seriously warn the Government that, if they prevent Russian vessels from entering the river Tyne, they will add to unemployment. As a representative of the travel-to-work area with the highest unemployment rate in


England — more than 30 per cent. of the men in the travel-to-work area of my constituency and that of my hon. Friend the Member for Jarrow (Mr. Dixon) are out of work —I know that already this year we have had more than £1 million worth of work from the Russians. I have heard much criticism of the Russians in this debate, but at least they pay their bill and are good customers. We want Russian vessels on the river Tyne. I hope that, if the Under-Secretary of State cannot give an answer today, he will write to me.

Mr. David Mitchell: I do not want to detain the House for any longer than need be. I apologise to the hon. Member for South Shields (Dr. Clark) if my summing up in the earlier debate deprived him of the opportunity to participate. That was unintentional. We did not have sufficient time to discuss such an important subject. I wanted to put several points on the record, because hon. Members on both sides of the House raised a large number of issues. I shall ensure that the points made by the hon. Member for South Shields about fiscal matters are conveyed to my right hon. Friend the Chancellor of the Exchequer, and I shall write to him about the entry into the Tyne of Russian vessels.
My hon. Friend the Member for Uxbridge (Mr. Shersby) raised a number of points and expressed his continuing anxieties. I well know the points that he made at the earlier stage of the legislation. I shall write to my hon. Friend about the legislation in other countries. The Government's objective in the definition of a shipper's organisation has been to ensure that those organisations able to play a worthwhile role in consulting conferences will be recognised, but to avoid setting conditions requiring conferences to consult so many organisations that the process becomes unmanageable.
My hon. Friend the Member for Uxbridge asked about a national line and about how the Government will monitor conditions set out in regulations 2(4) and 2(5). The Government will not intervene. These are matters for the liner conference and disputes will be referred to the civil courts. It will be in the interests of other lines to monitor progress.
The hon. Member for Wigan (Mr. Stott) and other hon. Members questioned the wisdom of our being involved. They suggested that extrapolating the historic trend of protectionism raised the question whether we would be better to join those countries which voted in favour of the code and get our 40 per cent. out of our trade. That assumes that no further effective steps are taken to resist protectionism. I hope that I managed to convey to the House our clear intention to be active on that front, especially in co-ordinating resistance protectionism within Europe and through the United States — Consultative Shipping Group talks, with the expectation that there will be progress in January or February.
Hon. Members referred to charges imposed on our exporters if they lose the freedom to choose which they now enjoy. Some goods for Brazil from the east coast of the United States travel via western Europe because that is cheaper than using the carved up trade between the other two countries. That shows the damaging effect on a country's exports when there is a stranglehold on the shipment of goods.
The industry's calculations show, and the General Council of British Shipping has made this point also, that it would be better for our ship operators if we joined the liner code on the terms now proposed. Although I understand the misgivings that have been expressed, I believe that there must be a coincidence of interest between the ship owners and the unions. There is room for the unions to talk more closely and to understand each other's thinking. That would be a helpful step forward. I hope that hon. Members will join me in saying that that should be commended to the parties. I hope, too, that the House will feel it right to approve these regulations.

Question put and agreed to.

Resolved,
That the draft Merchant Shipping (Liner Conferences) (Mandatory Provisions) Regulations 1984, which were laid before this House on 13th November, be approved.

MERCHANT SHIPPING

Resolved,
That the draft Merchant Shipping (Liner Conferences) (Conditions for Recognition) Regulations 1984, which were laid before this House on 13th November, be approved. — [Mr. David Mitchell.]

Northern Ireland (Appropriation)

Mr. Deputy Speaker (Mr. Harold Walker): Before I call the Minister to move the Appropriation (No. 3) (Northern Ireland) Order 1984, I should remind the House that this order deals with specific Supplementary Estimates and the debate should, therefore, be confined to agricultural assistance and social security benefits, or to other specified matters arising directly from the order.

The Minister of State, Northern Ireland Office (Dr. Rhodes Boyson): I beg to move,
That the draft Appropriation (No. 3) (Northern Ireland) Order 1984, which was laid before this House on 20th November, be approved.
This order is being made under paragraph 1 of schedule 1 to the Northern Ireland Act 1974. The purpose of the draft order is to authorise the issue of £41 million out of the Consolidated Fund of Northern Ireland in respect of the autumn Supplementary Estimates of Northern Ireland departments and to appropriate this sum for the purposes shown in the schedule. The House has already approved a total Estimate provision of £2,832 million for this financial year; the present draft order will bring the figure to £2,873 million. Detailed information about the provision sought can be found in the autumn Supplementary Estimates volume, copies of which have been placed in the Vote Office. The draft order covers only four out of the 39 Votes of Northern Ireland Departments. Provision is sought to meet the cost of the continuation of special measures to assist agriculture, and to fund the milk outgoers scheme. On the social security side, more money is required to pay increased numbers of recipients of a range of non-contributory benefits and to cover the cost of the new severe disablement allowance.
Before I deal with the details of the provisions I shall, as is customary on these occasions, and with your permission Mr. Deputy Speaker, say a few words about the economic position in Northern Ireland. Mr. Deputy Speaker has not yet intervened. I have read the previous Appropriation debates as part of my training for this post, which is why I asked for the permission of Mr. Deputy Speaker.

Mr. Deputy Speaker: Order. The Minister should set a good example by following the advice that I tendered at the outset, when I reminded the House that the debate should be confined to agricultural assistance, social security benefits or other specified matters arising directly from the order. I am sure that the Minister does not want to debate the economy of Northern Ireland.

Dr. Boyson: I shall accept your guidance on that point, Mr. Deputy Speaker. I shall have to use my rather splendid paragraph on some other occasion, when I know that it will be enjoyed by hon. Members.
Now to the details of the four Votes covered by these Supplementary Estimates. The main purpose of the two Votes in Class I, which covers agriculture, is to increase funds for the various special aid measures to assist agriculture which were announced in February 1984. Provision is also sought to cover the initial payments under the milk outgoers scheme and the fees and expenses of tribunal and panel members adjudicating milk quota cases.
In Vote 1 there are three main items. An estimated £450,000 is sought for continued measures to develop the

quality of beef cattle production, mainly through reduced charges under the Department's artificial insemination service. That provision is part of the special aid measures, most of which fall in Vote 2, and to which I shall be referring a little later in this speech.
New provision of £800,000 is required to meet the cost of compensation payments to those milk producers who have undertaken to give up milk production and thereby release quota for reallocation. A further £370,000 is sought to cover the costs of the Northern Ireland dairy produce quota tribunal and local panels established to adjudicate on special case claims and quota allocations, together with payments to the Northern Ireland Milk Marketing Board for the administration of certain functions under the dairy produce quota regulations.
Right hon. and hon. Members would, I am sure, wish me to make some comment on the present milk quotas position. All wholesale producers have by now received definitive primary quota allocations based on 1983 sales. The total primary wholesale quota so issued amounts to some 1,286 million litres, out of the total Northern Ireland allocation of 1,316·7 million litres, which means that 30·7 million litres have not been allocated. About 3,900 producers applied for special case treatment, either because of an exceptional event which adversely affected production in 1983 or because they were committed to expansion. Almost all these special case claims have been considered and provisional awards of secondary wholesale quota have been made by local panels in about 1,700 cases. The remaining claims have been rejected. Producers have, of course, the right of appeal to the Northern Ireland Dairy Produce Quota Tribunal, and at present 750 have exercised that right. The tribunal is also required to adjudicate on cases made under the exceptional hardship rules and here 3,430 producers applied for consideration. As at 28 November, decisions had been taken on 1,788 of these and provisional awards made in 540 cases. The remainder will be dealt with over the course of the next few weeks.
I have great sympathy for those farmers who are attempting to make unwelcome and difficult adjustments in circumstances where unavoidable delays have resulted in uncertainty about final quota allocations and levy liability. It would be remiss of me to continue without reference to the immense efforts being made by members of the tribunal and panels on behalf of those farmers who have sought a change in their position under the special case rules or have made appeals. In particular I should mention the leadership, which has been provided by Mr. W. E. Boyd, the chairman of the tribunal. The industry and the Government have cause to be grateful to Mr. Boyd and the many other people involved in establishing a base from which individual producers can better take sensible decisions about their milk businesses.
Under the milk outgoers scheme 595 producers have submitted applications, thereby offering to release a total of 53·3 million litres for reallocation. The Department has written to all producers with a valid application inviting them to proceed, and those who decide to take up this invitation will have four weeks to make a claim for payment. Since producers with special case or hardship applications do not have to commit themselves until their claims are determined, it will therefore be some time before the position on overall quota surrender is known. However, as a number of applicants have decided to


withdraw from the scheme it is already clear that additional quota released will be well below the initial offer levels.
With only 30·7 million litres of primary wholesale quota unallocated out of the Northern Ireland total, and a potential maximum of about a further 20 million litres becoming available from the outgoers scheme, the way ahead for distribution to people with special claims will obviously be difficult.
The second of the two agriculture votes, Class I, Vote 2, is mainly for special local support schemes. There is £5·5 million required for continuation of the milk consumer subsidy, which enables a higher wholesale price to be fixed for milk going to the liquid consumption market. Without that, consumers in Northern Ireland would have to pay more than consumers in Great Britain, or dairy farmers in Northern Ireland would suffer an even bigger gap between their average milk price and that in Great Britain. There is £2·3 million required for continuation of aid to pig and poultrymeat processing plants and egg packing stations, with the objective of easing the pressures on the intensive livestock sector and maintaining employment in the processing industry. Finally, £1,948,000 is sought under the grassland scheme, which was first introduced two years ago to encourage the improvement of grassland productivity outside the less-favoured areas. Following extension of the less-favoured areas the scheme will, of course, now apply to a much reduced area and expenditure will consequently be less.
I close my remarks in relation to agriculture by reminding the House of the background to special aids and the objectives we are seeking to achieve by continuing to support them. The absolute and relative importance of agriculture to the Northern Ireland economy is obvious. This is one of the first points that struck me when looking at the structure of the economy of the Province. Agriculture remains the largest industry — farm employment represents 9·8 per cent. of total civil employment and ancillary industries constitute a further 3 per cent. Agriculture produces 5·6 per cent. of the Northern Ireland gross domestic product. At the same time, farmers in Northern Ireland face particular disadvantages, such as remoteness from the main markets, high dependence on imported feedstuffs and lack of suitable alternatives to livestock enterprises, the latter being less well supported under the common agricultural policy than other products such as cereals.
Against the background of a general economic weakness, and unemployment rates higher than those in any other United Kingdom region, the justification for those special aids is that they will be of some assistance in maintaining production and employment on and off farms. Having visited farms in Northern Ireland, I know why farmers have concentrated on livestock as opposed to cereal growing, and I now realise how high up they are and the amount of rain that falls in those areas.
With regard to the social security programme, additional provision is being sought in Votes 1 and 2 of Class X. Vote 1, which covers national insurance, makes provision for the supplement from the Consolidated Fund of Northern Ireland to the Northern Ireland national insurance fund. The supplement is an annually defined percentage of contribution income, which for the current year is set at 11 per cent. The Estimates may therefore

need revision during or after each financial year in the light of the Government Actuary's revised forecasts of contribution income. The supplementary provision now sought thus comprises an upward revision of £3·9 million for the current year, and a final upward adjustment of £250,000 in respect of 1979–80.
Class X, Vote 2, covers non-contributory benefits. The Supplementary Estimate of £26·12 million represents an increase of 6·3 per cent. on the original provision. The largest increase sought is for supplementary benefits. The additional provision of £770,000 in respect of supplementary pensions is necessary because of the reduction from 70 to 65 years of age in the upper qualifying age for age-related heating additions and the introduction of a new, higher age-related rate. The additional provision of £14·22 million sought for supplementary allowances is attributable to a rise in the number of beneficiaries and an increasing number of single payments.
An additional £·8 million is sought in respect of housing benefits. There have been increases both in the numbers of eligible claimants and in the average weekly rebates and allowances.
A new benefit — severe disablement allowance —replaced non-contributory invalidity pensions from 29 November 1984. The new allowance is similar in purpose to the benefit that it has replaced, but more people will receive it. All those who qualified for receipt of non-contributory invalidity pensions on 29 November automatically qualified for the new allowance. Apart from that, people who have been continuosly incapable of work for at least 28 weeks because of a disability on or before their 20th birthday can qualify for the new benefit simply on that basis. Those who become incapable of work later in life must also be severely disabled to qualify. Married women can claim the severe disablement allowance even if they are able to carry out normal household duties. The benefit is being introduced in two phases—people aged 50 or over and those aged 16 to 34 can get the new allowance from November 1984, while those aged 35 to 49 will be eligible from November 1985.
There are several other factors contributing to the net increase sought in that Vote. In particular, there is an additional provision of £800,000 in respect of attendance allowances due primarily to a rise in the number of beneficiaries.
In my opening remarks I have tried to outline briefly the main features of the draft order and to give right hon. and hon. Members an appreciation of the reasons for the changes in these four Northern Ireland Votes. I shall listen with interest to the points raised by hon. Members, and my hon. Friend the Under-Secretary of State will reply.

Mr. Harold McCusker: I intervene briefly to give my agricultural friends the opportunity to shake the straw out of their hair because no doubt they will be splashing about in the milk quota once again when they have had time to digest what the Minister has just told us. I should like to comment on three of the allowances that he mentioned when he introduced the Supplementary Estimates for the Department of Health and Social Services in Class X, Vote 2.
I should like to comment, first, on the attendance allowance increase of £800,000. That must be the best £800,000 that we shall spend this year. I am glad that there are 500 new beneficiaries. There are not all that many of


them in Upper Bann, but I am glad that some people are having success in getting that allowance. It is one of the most frustrating allowances to deal with and upon which to advise one's constituents.
I should like to refer to the method that is used to determine whether someone qualifies for the allowance. A doctor visits the applicant, who might be an old person, with his memory failing. Not all applicants, but many, might suffer from varying degrees of dementia. The doctor asks the applicant a series of questions, as well as giving him a medical examination. Such people are not in the section of the community that tries to suck the system dry. The applicant tries honestly to answer the questions asked by the doctor. He might be more than honest, and understate his case, thus depriving himself of the allowance. In doing so, such people are only doing themselves and the community in general a disservice. The assessor might take at face value what the person says, so he is doing us all a disservice.
Surely, if anything, the allowance was designed to ensure that we do not put a greater burden on geriatric hospitals and other homes which are the alternative for elderly people if their families cannot maintain them at home. Some 500 people will put an added burden of almost £1 million on our social security budget, yet the one thing of which we can be sure is that there will be no gross abuse of the increase. The only abuse, if there is one, is that the elderly person might marginally receive some assistance to which he is not entitled if one applies a strict interpretation to the rules. But, in reality, £1 million is being spread among several concerned families in the community in an attempt to help them to look after the elderly people in the bosom of the family and prevent them from becoming an added burden on our society.
I hope that an effort will be made to involve the applicant's local doctor, because the applicant's general practitioner is frequently at variance with the assessing doctor. If local doctors are professionals and we are to believe that they will make an honest judgment—which we must believe — some cognisance must be taken of their assessment of whether that person, and his family, should benefit from the allowance. Therefore, I welcome the increase and look forward to its increasing even more. I believe that it will be offset by savings in other places.

Mr. Peter Robinson: Does the hon. Gentleman agree that the most frustrating thing in connection with attendance allowance is that, if someone has an independent mind and does not want to feel embarrassed by letting the person visiting him know how incapable he is, there is no appeal system, except on a point of law?

Mr. McCusker: I have suffered the same frustration as the hon. Gentleman and others. We are dealing with a category of people who do not want to take advantage of the system. Perhaps one can say that that is unfortunate. That applies to other aspects of the social security system. Those are the people who are least willing to take what they are entitled to — for example, in supplementary benefit—whereas others are prepared to take what they are not entitled to.
Heating addition is another part of the supplementary benefits system. A few days ago I had a visit from an elderly constituent who had moved home. In her former home she had used a room heater from which she ran

several radiators. She had been assessed as qualifying for the higher rate of heating allowance. In her new home she used a similar room heater but without radiators. She still had to fire that room heater, but she also bought a couple of oil-filled radiators to heat the other rooms. That combination was more expensive to run, yet she was told, "I am sorry, but you no longer qualify for the higher heating addition. You will now qualify for the lower heating addition." That is incredible.
I choose that allowance as an example, and I should like to make it clear, first, that we are dealing with the same category of person to which I referred earlier, and, secondly, if there is any abuse, it is marginal. We are talking about someone aged 60 or 70 who is taking advantage of the social security system to get perhaps £1 or £2 more than he ought simply to heat his home. That is an extremely fine judgment to make.
Most of the money is spent on supplementary benefit. Is the Minister satisfied that every effort has been made to prevent massive abuse of that system? Is he convinced that the number of investigators at his disposal is adequate to do the job? Equally, is he convinced that in his Department and social security offices generally there is an even-handed application when judging these cases?
The Minister of State talked about an increase in the number of claims for single payments. I have been supplied with some statistics, which show that 33,000 single payments were made in 1979. By 1983, the figure was in excess of 100,000. In 1979, single payments amounted to about £1·5 million, but by 1983 they were in excess of £12 million. Is the Minister satisfied that we are getting value for money?
In essence we are not talking about people aged 65 or 70 who have given a lifetime's service to the community and have applied for assistance to help buy a new appliance. In fact, the lady who came to me with her heating problem bought a new cooker for £90. She is in receipt of minimal supplementary benefit, and I suggested that she should apply for supplementary benefit assistance to help buy that appliance. She told me, "I'll do no such thing. I wouldn't have the town of Lurgan talking about me." She was indicating that she was sufficiently independent and had saved enough money to buy the cooker. She was also indicating that she did not believe the system to be watertight, and that if she did apply there was no guarantee that it would be in confidence. That lady did not believe that her application would be in confidence because of the rumours and talk that one hears throughout Northern Ireland about the abuses of the system.
For example, my hon. Friend the Member for Newry and Armagh (Mr. Nicholson) will no doubt be aware of the strong rumour that a firm in Newry will remove one's furniture, store it and return it when required, thereby enabling the householder to make a large claim for furniture under the single payments system. No doubt that firm will be happy to furnish the individual with a receipt to prove that he was entitled to the £1,000 that he received.
There is also a rumour in my constituency that if someone gets a single payment of £350 he can approach a "dealer" who will buy the cheque for £250 and furnish a receipt. The single payment was not designed to enable people to line their pockets with £250 or to allow a so-called "dealer" to take a £100 cut.
I asked another of my hon. Friends what he considered to be the worst abuse of the single payment system, and he told me that it was voluntary separation. A man and


wife can agree to separate temporarily, and for some reason they seem to be assisted by the Housing Executive. The two partners then set up home independently and claim £1,000 or £1,200 to furnish those households. Consequently, they are reconciled, but £1,000 has been lost by that time. We have all heard of someone applying for a cot when there is one in the attic, merely because he wishes to cash the cheque.
I must accept a strict interpretation of the rules for elderly people applying for attendance allowance to help their relations support them within the bosom of the family. I also accept that great care must be exercised to ensure that there is no abuse of that system. But if a pensioner is to be taken off the higher rate of heating allowance and placed on the lower rate because of the number of radiators she uses, I want an assurance that the same effort is being made to prevent abuses of supplementary benefit, which now amounts to £250 million, £12 million of which goes on single payments.

The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Chris Patten): Perhaps I can help the hon. Gentleman. I estimate that this year we shall be spending more than £20 million on single payments.

Mr. McCusker: That makes my point. If he has not already done so, I ask the Minister to investigate this matter. I appreciate that there are dangers in what I shall say, but is it possible to identify where most of that money is spent? I should not be surprised if it was spent in those areas of the Province where the Queen's writ does not run as it should. There are all sorts of pressures on all sorts of people in those areas to be extremely careful when dealing with these matters. If we are now talking about an increase from £1.5 million to £20 million in five years, action clearly needs to be taken. Now that the Minister has confirmed that figure, I look forward to an assurance that he is getting value for money in respect of every penny of that £20 million.

Rev. Ian Paisley: Like the hon. Member for Upper Bann (Mr. McCusker), I am sure that any hon. Member from Northern Ireland would express concern about attendance allowances. Such concern must be highlighted. The other matters to which the hon. Gentleman referred are also of the utmost importance, especially as the Minister has said that single payments this year will amount to £20 million. That must be looked at carefully. No doubt my hon. Friends will develop these matters further.
I wish to speak about Class I, items 1 and 2. Anybody who heard the Minister introducing the order and who did not know anything about Northern Ireland would think that Northern Ireland was to receive special aid which would put agriculture in the Province in a far better position than agriculture in any other part of the United Kingdom. I should like to underline what has been taken out of Northern Ireland agriculture and the cross which Northern Ireland farmers have to carry so that our view of special aid to Northern Ireland is put into its proper perspective.
On 12 November the Minister of Agriculture, Fisheries and Food told us of his intention to save £40 million in 1985–86. Those who know something about Northern Ireland agriculture will be aware that the Department of

Agriculture in Northern Ireland has a special relationship with the Ministry of Agriculture, Fisheries and Food and that MAFF is a very important part of the administration of Northern Ireland agriculture. On 11 December the Minister of Agriculture, Fisheries and Food announced, in reply to a written question, that changes in the farm capital grants were estimated to save about £40 million. In other words, United Kingdom farmers will be £40 million worse off in 1985–86.
The new standard rate of grant in the lowlands under the agriculture and horticulture grant scheme will be 15 per cent. It was 20 per cent. In the less-favoured areas the new standard grant will be 30 per cent. Grant will no longer be available for land clearance and land reclamation. Those activities will be assisted in Northern Ireland only where the Minister says that they are essential to maintain farm incomes. The ceiling on the amount of investment that may be grant-aided will be halved, except for heated glasshouses and orchard replanting. Heated glasshouses in Northern Ireland are few and far between. Grants for orchard replanting will not be of very much help to Northern Ireland farmers. The limit per labour unit will be about £25,000, and the overall business limit over six years will be about £50,000—again halved.
The changes made under the agriculture and horticulture development scheme and the agriculture and horticulture grant scheme relate to the exclusion of certain land reclamation items and reductions in the rate of grant for field drainage, from 70 to 50 per cent. in the less-favoured areas, and from 50 to 32.5 per cent. in the lowlands. According to the Minister, the policy is to have a closer integration of conservation and agriculture policies through high rates of grant for certain agricultural works which are of benefit to the environment, and to exclude land clearance except for Northern Ireland reclamation works. That may be helpful in East Anglia, but it is not helpful in Northern Ireland.
The sugar on this pill is an increase in the rate of grant from 20 to 30 per cent. for hedges, walls and dykes built of traditional local materials and for associated gates. The farming community in Northern Ireland is told that more cereals should be grown. If it were to grow cereals, instead of erecting dykes ail hedges and putting up traditional gates, the farming community in Northern Ireland would have to remove them. So that will not be of any real benefit to Northern Ireland.
I am trying to put these special aids for agriculture into their proper perspective, because the brakes have been firmly applied to the agriculture industry of the United Kingdom. What was described by the Government as savings in 1985–86 have turned out to be a major change in policy. For Northern Ireland, this is a serious matter. The changes made to the national schemes will apply to Northern Ireland. There are, however, two valuable supplementary schemes which have been recognised, and I give credit for that. I am pleased that Northern Ireland is to retain the grassland scheme and that it will continue to be paid for land reclamation. I am also pleased that the agriculture development programme in Northern Ireland is to continue. That programme is 40 per cent. funded by the European Economic Community, but I suppose that we should be grateful for small mercies.
The rates of grant and special supplement for the grassland scheme which applies to lowland areas remains unchanged, but the changes and reductions in the national capital grant scheme mean that the overall benefits to


farmers will be reduced. In the case of drainage, for AHGS relevant items the reducion will be from 45 to 30 per cent., and for AHDS relevant items the reduction will be from 55 to 37.5 per cent. The Ulster Farmers Union says that under this announcement Northern Ireland stands to lose £14 million. This means that farmers in England, Scotland and Wales will lose £26 million. That adds up to £40 million. Does this seem to be a fair proportion for Northern Ireland—a loss of £14 million compared to a loss of £26 million in Great Britain? I believe that it is a disproportionate loss to Northern Ireland agriculture. I hope that the Minister who is to reply to the debate will be able to help us about that problem.
The effect of the EEC farm price agreement for 1984 is having a depressing effect upon farm incomes. Farmers must spend money in order to earn grant. They have been caught in a pincer movement. The future looks bleak indeed for our most important industry. I am pleased that the Minister who introduced the order pointed out that 13 per cent. of all those employed in Northern Ireland are employed in agriculture. Nearly £250 million worth of our exports came from the farming industry. This industry is very important to Northern Ireland.
That leads me to the other very important inroad that has been made into Northern Ireland agriculture. The milk quotas will take about £20 million out of the agriculture industry. This will result in a total reduction of £34 million, while we are given aid amounting to £10 million.
I am sure that both Ministers on the Front Bench know the views of Northern Ireland dairy farmers. I am sure, also, that the figures that we have been given today about the quota that will be available will come as no surprise to those of us who know what is happening to the dairy industry in Northern Ireland. We are in a very serious position. That situation should never have arisen, and that is why the dairy farmers in Northern Ireland strongly condemn the Government for their handling of the matter.
The Milk Marketing Board in Northern Ireland, the Ulster Farmers Union and the Northern Ireland Agricultural Producers Organisation, together with the three Members of the European Parliament from Northern Ireland, the right hon Member for Strangford (Mr. Taylor), the hon. Member for Foyle (Mr. Hume) and I, met Mr. Dalsager, the Commissioner for Agriculture, in Strasbourg. He told us that the purpose of the 65,000 tonnes allocation was to give more to Northern Ireland, because of the position of our agriculture industry within the United Kingdom. It was proposed that when the United Kingdom quota was settled Northern Ireland should get an extra 65,000 tonnes. To our cost, we know that that 65,000 tonnes was not given to Northern Ireland. It was spread throughout the United Kingdom, so that we got little more than 5.5 per cent. of it. That is why there is so much bitterness in Northern Ireland. We were told in Europe that we should get more, but we did not get any more. The jewel of Northern Ireland agriculture—the dairy sector—has been kicked into the gutter and will face serious problems.
Panels and tribunals have been set up, but when they give judgments the Government are not able to give allocations to those for whom they were intended. We spend money on a system to investigate hardship cases and to allow people to put their case to tribunals. Those people win their cases, but they still face serious problems. Some cases have already been adjudicated upon and the appeals machinery has been used. People who have brought those

cases have been told that they will get a bigger quota. But how much will they actually receive? That question needs to be answered.
The Prime Minister said that until every member state of the EC pays the levy the British Government will not collect the money. We should remember that Northern Ireland is the only part of the United Kingdom that will have to pay the levy. Therefore, our farmers want to know what the future holds.

Dr. Boyson: I referred at a recent Question Time to the statement made by my right hon. Friend the Prime Minister about the milk levy. The Minister of State, Ministry of Agriculture, Fisheries and Food announced in a written answer today:
 We are fully committed to the milk supplementary levy arrangements agreed by the Agriculture Council in March. It is clear from last week's Council discussion and from the position adopted by other member states that there are differences in the interpretation of the rules and uncertainty about the amount of levy due. We are, therefore, suspending action for the time being. We are keeping the situation under review and are ready to collect and pay over any levies that may be due from us once the legal position becomes clearer and other member states are conforming to the requirements." — [Official Report, 17 December 1984; Vol. 70, c. 37.]
I have not discussed the matter with the Minister of State, Ministry of Agriculture, Fisheries and Food, but it seems that we are not paying any levy at the present time.

Rev. Ian Paisley: I welcome that reply, even though it only puts off the evil day. Knowing something about Europe and about the Governments who have not taken even the first steps to legislate so that they can collect levies, I know that it would be the height of madness for us to demand payment from our people.

Dr. Boyson: The hon. Gentleman has referred to the different attitudes of various countries. It may he helpful if I point out that Belgium, the Netherlands and the Republic of Ireland are taking the same approach as we are. So are the Germans, except that they have already collected some levy, which they are holding on to. The position in other countries varies.

Rev. Ian Paisley: That statement will help the farming community, the Milk Marketing Board and everyone else in Northern Ireland. I trust that the Government will remain firm on the issue. I know that if the British Government had said, "We will not pay the levy," other countries would have used that as an excuse not to pay the levy either. Now the matter is in the court of those who have not legislated to enable themselves to pay the levy. I am glad that that information is out in the open.
Ministers in Northern Ireland will be confronted by people who feel bitter because they have been badly treated. The Prime Minister said that we would get an increased production allocation. Subsequently, that undertaking had to be withdrawn. We were also told that we would be as well off as the rest of the United Kingdom. Now we find that Northern Ireland farmers do not get the same as British farmers for their finished products.
Northern Ireland agriculture faces a serious problem. The Minister of Agriculture said that that was a thing of the past, but it will never be a thing of the past. I trust that, even now, we can find a way to alleviate the hardship of Northern Ireland's dairy farmers.
Agriculture in Northern Ireland faces other problems, but the difficulty experienced by dairy farmers


overshadows the others. The beef sector faces problems, but I am glad that the intervention regime has been made to work in Northern Ireland. At one time we did not think that we would have the necessary storage space or get the rights that we ought to have as a member of the European Community to get our meat into intervention. I am glad that the pressures put on the Minister of Agriculture have been effective and that there is provision for intervention.
I understand that an application is before one of the other Ministers for blast-freezing accommodation and factory space in Northern Ireland. I hope that that space will soon be available, so that we shall not have to take produce from Northern Ireland. That would be a great help to our farming community.
We shall no doubt hear more about how the Minister hopes to allocate special aid. However, even with special aid, agriculture has been badly hit and will suffer severely in the coming year. As agriculture provides permanent jobs and maintains the heart of employment, a larger measure of aid should be made available for it. That is what the Minister's message should be to farmers tonight.

Rev. Martin Smyth: I shall not follow the hon. Member for Antrim, North (Rev. Ian Paisley) on that latter point because it may raise difficulties in that shopkeepers and industrialists may also look for more aid. We are debating a specific Appropriation order. I would be happier if we were doing so in a United Kingdom context because some of the issues that I shall raise may be applicable to other parts of the United Kingdom. I may appear to ask for something specifically for the people of Northern Ireland, but I shall deal with the division of the cheque of the nation to the needy, especially regarding Class X, Vote 2.
I welcome the Minister's statement that there has been an increase in the numbers who have taken up the severe disability allowance. Under the old scheme many deserving cases did not get it. I suspect that even yet all those entitled to it are not claiming it and that some who should receive it may not be entitled to it because of the way in which the rules are drawn. The rules were widened but they were drawn to exclude many people because the nation could not foot the bill.
How are the new policies on housing benefit working out under the new point system? I understand that anomalies are developing and injustices occurring. The housing authority introduced a fine point system. The normal bureaucratic process is to think of a number, double it, subtract 10 and come up with an answer. In some of our houses people were given points for having a kitchen dinette. However, we discovered that there was no specific measurement for a kitchen dinette. After several test cases it was acknowledged that a kitchen dinette was not specified. We thought we had won that, but then we discovered that there was no reduction in the rent and no housing benefit. When we inquired we found that, although there was no kitchen dinette, there was a living-room dinette. Therefore, the Housing Executive transferred the points across and charged people accordingly. Yet a house that is supposed to have a living-room dinette is no bigger. In many such rooms there is not

space to put a table. At best one can have a drop-leaf table or a card table. Have there been savings in housing benefit for the Department?
There has been an increase in the basic pension, together with a re-examination of the allowances of those who hitherto had them. There is a case in my constituency that is typical of the sort of older people to whom my hon. Friend the Member for Upper Bann (Mr. McCusker) alluded. The husband is more than 80 and the wife is more than 70 years of age. Previously, they were entitled to a heating allowance, which brought them in about £1 a week. They now have the increased pension. However, through regrading, the allowance has been reduced. That family has an overall increase of 3p a week. Top salary review boards, Members of Parliament and trade unions would not be satisfied if, at the end of a pay review when there was supposed to have been an increase in line with inflation, they were losing. As we are considering the Appropriation order, will the Minister say how many people are being adversely affected by the new arrangements?

Mr. J. Enoch Powell: Will my hon. Friend bear in mind that that also bites upon payments for special diets as well as payments for heating?

Rev. Martin Smyth: I thank my right hon. Friend for widening my point. The arrangement has an adverse effect on those with special diets. Can the Minister assure us that food prices have been reduced, and tell us how those who three weeks ago were entitled to a special rate to meet the needs of their special diet can get resources to meet their medical needs?
As I said earlier, I would be happier if we debated the matter in the context of the United Kingdom as a whole, because it bites throughout the kingdom. My constituents are not happy with it or the glib response from the Department and the Prime Minister that the policy is to give people more in their basic pension so that they can choose how they use their money. That sounds nice, but those who receive an increased pension and have other pensions or savings to augment it find that the Treasury claws it back in income tax. It is not simply that pensioners are automatically given more money to spend as they wish. Many pensioners will lose because the increased pension takes them over the margin for benefits.
I am even more worried about pensioners who are net losers. A caring Government and Parliament should never legislate willingly for that and then dismiss complaints by saying that it is rough and ready justice. Can the Minister tell us how many people have been affected in that way?
Tonight we are dealing with an appropriation in aid. What worries me about social services in Northern Ireland is that whenever there has been a shortfall in the Northern Ireland programme the Department that deals with social services has made no bids for money to meet people's needs. Perhaps in its wisdom or otherwise the Department decided not to trawl for that money. I am referring especially to the problems of the elderly who have done their best to maintain their dignity in the community. According to the rules, they are entitled to the provision of a telephone service, but because there is a shortage of cash in the Department such telephones are being rationed and social workers must tell those elderly people that they cannot have telephones. It is rationing by lists. Time


magazine has said that it is becoming a modern problem in medicine, with doctors hoping that people will die before they have to spend money to meet their needs.

Mr. Chris Patten: I may have misunderstood what the hon. Gentleman said, but I think I am right in saying that my Department suggested several ways in which some of the underspend might be used in the social services area. The Assembly disagreed with those proposals and our views were changed. I make no elaborate constitutional point on the issue, but the hon. Gentleman will discover that the Assembly and many others believed that the money should be spent on educational schemes rather than on DHSS schemes.

Rev. Martin Smyth: The Minister is saying that the spending of the nation's money goes outside the remit of this Chamber. I am asking him why the Department did not put in bids for the specific services to which I referred. I assure the Minister that either here or in the Assembly I would have fought my corner on that matter. I have made inquiries and I understand that the Department did not put in a bid. Does the Department believe in the emphasis on community care and that we do not therefore need more money? If so, it is going in the right direction, although in the end it will cost the Department more than if it supported such people in the community.
I support the plea of my hon. Friend the Member for Upper Bann about the attendance allowance and ask for a little more understanding from those who conduct the final vetting. We live in an age of interdependence, but it would be utterly false to remove the pride of independence from the sick or the elderly. I have known doctors ask elderly people how well they can walk unaided. In many cases, those elderly people get up and do what we call in Ulster the rounds of the kitchen, holding on to the furniture and without using the Zimmer frame. They are then classified as being able to move unaided, and as a result they lose the mobility allowance or the attendance allowance.
I know a lady aged more than 80 who is remarkably fresh mentally and clear-eyed. She lives with her brother, who is aged more than 70. Her brother has managed to keep his car on the basic pension, but now he must give it up because they are not entitled to mobility allowance. Although he is looking after her, because of the way the axe comes down, he is not entitled to attendance allowance.
I draw the Minister's attention to the misuse of supplementary provision, which is creating an attitude that could not be described as helpful. I am thinking of a rehabilitation home for young people where those who have managed to obtain work are penalised whereas those who cannot find work are not. If a youngster is unemployed, his rent at the home is paid—it costs about £48 a week—and he is given £19 a week pocket money. His time is his own. However, if a youngster manages to find a part-time job, he is penalised by not being granted supplementary benefit. If a youngster must pay travelling expenses to go to work, he is worse off than the person whose rent is paid and who has £19 a week pocket money.
I hope that the review of the supplementary benefits system will do something more to help those who genuinely want work but who are not encouraged to find it. The Government speak about incentives and urge people to get up and do things, but in this case youngsters are encouraged to do nothing, to sit back and to relax.

There is misuse of the supplementary provisions, especially of those for younger people. I am glad to see that within England, at any rate, there has been a growing awareness of this problem and I hope that the forthcoming reviews will come up with something positive.
I take this opportunity to welcome the increase in the Appropriation order, but I wish to highlight the needs and misuses. I agree with my hon. Friends about some of the abuses that have occurred. This is straying outside the order somewhat, but as the matter has been raised and as the Minister has thrown it back to us I take the opportunity of asking whether the Minister has had any reply from any sources in Northern Ireland about the possibility of the aid for transport for pensioners being put on the rates.

Rev. William McCrea: I come to this House from a constituency with the highest unemployment in the United Kingdom and with a large farming community, in which the majority of the farmers have smallholdings. I appreciate and welcome any money being allocated to Ulster, and I appreciate the Minister of State's efforts on our behalf. He has shown clearly his interest in these matters since coming to Northern Ireland a short time ago, and I appreciate his grasp of the many problems, which he displayed clearly a few days ago when he addressed the Northern Ireland Assembly.
However, I wonder whether the Government fully appreciate the effect that the milk quota system is having, especially on the small farmers in my constituency. I was led to believe, whenever the matter was discussed, that the Government had it in their mind to safeguard dairy herds of about 40 cows. However, as the milk quota system is being applied, I find that there is a genuine suspicion that there is somewhere a desire to force the small farmer into liquidation and, rather than saving the small herd, a desire that the farmer with a small number of cows should be pushed below the poverty line and forced to rely on supplementary benefit. I assure the House that these are the genuine worries and concerns of the people whom I represent.
What assurances can the Minister give to those farmers who have already been adjudicated on? Will they receive the quota that they have been promised? The tribunals have sat and listened to the cases, especially hardship cases; and an extra quota has been given. What assurances can the Minister give to the farmers of my constituency and throughout the provinces on the likelihood of getting any of this quota? The Minister drew to our attention the fact that the outgoers scheme will fall far short of the Government's intentions for the initial estimation of the amount of quota that can be spread. I should like the Minister to direct his attention to that matter.
Farmers in Northern Ireland have been encouraged to invest in agriculture and new farm units. Up until the time that the quota came into existence, farmers were encouraged by the Department of Agriculture to go into milk production. After that encouragement, it is disgraceful that farmers are now being left high and dry and with a great financial burden on their shoulders.

Dr. Boyson: I do not think that what I can say will be helpful, but the hon. Gentleman has asked me a straight question on a matter that concerns everybody, and which has concerned me since I have looked at the figures. Originally, there was a cut of 6 per cent. plus a cut of 3


per cent. The 3 per cent. cut was to provide extra resources for those who, on appeal, won the right to keep the extra number of cows producing milk on their farms. At the moment, all but 30·7 million litres of the clawback have been allocated, and that 30·7 million litres are still available for distribution. It was hoped to add to that what was expected to come back on the outgoers scheme. Originally, that was estimated to be 53·3 million litres. Since a lot of people are not going ahead with the scheme, having been given the right to do so and to get their money from it, I estimate that less than half that amount will come back. Let us assume that it is 20 million litres. That means that the total available for distribution in Northern Ireland amongst those who have won their appeals will be only about 50·7 million litres.
I have come into this in the middle of it, and the Northern Ireland farmers know about this better than I do. But it was obvious from the start to anyone who could add up that, with the tribunals being left to decide appeals, there was no means of getting the equation into balance. It depends how many appeals are allowed and the demand. We know that we can provide about 50·7 million litres, but we only know that now because fewer producers are outgoing than the number who intended to at the beginning.

Mr. Deputy Speaker: Order. I am not sure whether the Minister is seeking to make a second speech or whether this really is an intervention, but even ministerial interventions should be brief.

Dr. Boyson: Your intervention has saved me, Mr. Deputy Speaker. Bearing in mind hon. Members' knowledge of these matters, I shall conclude my intervention immediately by saying that there was no means at the beginning of getting a balance, and there will be the Dickens of a job at the end to decide what is to be given to those whose appeals are successful.

Rev. William McCrea: I thank the Minister for his interesting intervention, though I am not sure that it was all that helpful. However, I hope that his hon. Friend, when he replies to the debate, will address himself to another question on the same subject. What has already been allocated of the 50·7 million litres by the tribunals so far? The Department should know the answer, and we shall be able to judge from it whether there is any reason for farmers to go to Dundonald house to have their appeals heard.
I suspect that, although some farmers will come back satisfied, having had their cases heard by the tribunals, they may be in for a disappointment when we come to consider the 50·7 million litres available. This is very serious, because the farmers have had a long wait. They have experienced months of deep concern and financial and other worries about this. Unfortunately, at the end of the day, they may come to a serious bump in the road when they discover that it is not possible to keep the promises that they felt were made to them at the tribunal.
Other hon. Members have raised a number of matters which are of the utmost importance to the people of the Province. Among them is the problem of housing benefit. I hope that the Minister will be able to say how the new points system for housing benefit is working in the Province. Only today I visited an estate in Watson Park,

Omagh. The tenants told me that under the new rents system their aluminium bungalows, which they could be blown out of on a windy night, will be on a par with a normal Housing Executive house. That causes me great concern. Within the next few days I shall be asking the Minister about matters relating to this estate. There are many worries about it.
I draw the Minister's attention to housing benefit. I notice from the paper that Northern Ireland Housing Executive rents are going up again. I was a member of the board and felt strongly about those rents. We were always being told that rents in Northern Ireland compared favourably with those in England and Wales. Will the Minister tell the House tonight how they compare with those in Scotland? What is the average rent for a Northern Ireland Housing Executive property compared with that of Scotland? When I was a member of the board there was a considerable differential. The problems of Scotland are no different from those of Northern Ireland. I hope the Minister will answer that clearly when he replies.

Mr. Chris Patten: Would the hon. Gentleman also like Northern Ireland to have the same expenditure, pro rata, on housing as Scotland?

Rev. William McCrea: I am sure that the Minister is fully aware that spending on housing in Scotland is through the local authorities. It was taken from the local authorities in Northern Ireland. If the Minister wants to tell the House tonight that he is handing housing back to the local authorities in Northern Ireland, it will be a most interesting statement. I shall be glad to welcome that as a former member of the Northern Ireland Housing Executive board because that is an unwieldy body and unfortunately it is far removed from many of the day-to-day problems of my constituents in Mid-Ulster or those of other hon. Members. I hope that the Minister will not run away from my question. Will he, for the record, tell the House the difference between the average rent in Northern Ireland and that in Scotland?
As the hon. Member for Upper Bann (Mr. McCusker) said, I do not know where all the people who are getting an attendance allowance come from. They definitely do not come from my constituency. I am delighted that there will be 500 new beneficiaries. I strongly believe that it is desirable to keep the elderly in the community. The Ulster people have an independent character that is in many ways commendable. The Government do not desire to put an extra burden on geriatric units or hospitals because there are already insufficient for the number of elderly people who desire to enter them.
I wholeheartedly agree with the hon. Member for Upper Bann that the majority of those being denied attendance allowance in the Province are honourable citizens who do not like to complain. That is the last thing they want to do. Indeed, the elderly in Ulster have always come from a proud stock and they do not like to say that they do not have the means to look after themselves. Indeed, when a doctor visits them they get into a nervous state and deprive themselves of many of the benefits which are their right because they are unwilling to plead poverty. That is the simple substance of the situation.
Some families are anxious to look after their elderly relatives, but there are many who are not. The House should — I believe that the Minister will — commend those families who genuinely care for the elderly in the


community. Everyone should salute them. Indeed, it is desirable to encourage more of that. I would wholeheartedly encourage families to show greater concern for their loved ones.
I turn to a point that has already been touched on. People rely on their local doctor. People are always told that their doctor is their professional adviser on health and that they must believe him. But he is believed only until it comes to benefits, and then it is said that the local doctor is not the man to rely on. I doubt whether the Government will disagree when I say that they probably have a better record than the Labour Administration on pensions and other benefits. Indeed, I think that I have heard the Prime Minister state that at the Dispatch Box.
But I assure hon. Members that ordinary pensioners do not find that they have a lot of money to spend at a time of cuts in the number of home helps and in the provision of telephones. Indeed, the hon. Member for Belfast, South (Rev. Martin Smyth) mentioned that. It is like David in the scriptures, who said "no man cared for my soul". Many pensioners think that no one cares for their bodies either. Quite a few pensioners have come to speak to me about the 50p being taken off. Everyone got the addition to their pensions, but 50p was taken away from heating allowance. I know that 50p may not mean much to hon. Members, but I can assure them that it means a considerable amount to pensioners, to those on long-term supplementary benefit and to widows.
I should like to hear the Minister's comments, because I am told that the allowance amounts to practically nothing. I think that the hon. Member for Belfast, South said that his constituent got a 3p addition. Where is the allowance for inflation in that? People feel that they are worse off as a result of the change.
Like other hon. Members, I must express alarm about supplementary benefit. Every effort must be made to stop abuse. I do not believe that the number of investigators is sufficient. I speak as a former employee of the DHSS, and I feel sure that there is an inadequate number of personnel to investigate the abuse and skullduggery going on.
A few weeks ago I went to the DHSS about a very serious instance of abuse. One of the senior officials there told me that he knew that it was going on. Indeed, the mechanism of abuse was so great that there was an early warning system among the fishermen. Consequently, whenever someone from the Department was in the vicinity, the alarm was raised over the air waves, the boats were cleared and the men are able to live on supplementary benefit as well. It is alarming that a chief official at the Department should know that that is going on, yet say that there is nothing that he can do about it.
I know that many who genuinely need single payments are denied them. But many of us are worried that, although genuine cases are sometimes denied, those skilful in abuse are apparently able to get away with it. I shall give a typical example and invite the Minister to ask the business man concerned whether what I say is true. I raised the matter in another place and my case was not believed. A person desired a colour television. He was on supplementary benefit and put in for a special needs allowance. That person went to an electrician, a business man, and asked him to order a colour television and to make out an account for furniture. A television enclosed in a cabinet is regarded as furniture. To ensure that he got the best furniture and television, the person asked the electrician to ensure that the cabinet had Queen Anne legs.
The business man was worried. He asked, "Are you sure you are entitled to this?" The person promised him that he would be back immediately with a cheque. The business man thought that he would like such a television set himself and wondered whether to order it. He decided to but thought that he would never see the person again. Inside three days the person was back with a state cheque for his colour television in a cabinet with Queen Anne legs. That should be condemned, but it is not unusual. The hon. Member for Upper Bann talked about buying cheques. My friend the business man told me that he was offered £230 if he would buy a cheque. In that one-off payment he would be allowed to keep the £230. He was not willing to buy the cheque.
I find such incidents alarming. The Minister is also worried. He has said so in the Province. What action is being taken on the ground to ensure that that practice is stopped?

Mr. Roy Beggs: Does the hon. Gentleman agree that it would help the Minister if a close examination were made of those business premises which cash such cheques? Does he accept that honest and upright business men refuse to accept the cheques or to participate in fraud?

Rev. William McCrea: I agree wholeheartedly. That is a matter which should exercise the Minister.
As the hon. Member for Belfast, South said, there are parts of our country in which the Queen's writ does not run. Government officials cannot go to parts of the Province. In another place I described a typical example involving a television licence. The official was investigating. He was taken out of his van, stripped, sent back and told, "Appear again and you'll get a bullet through your head." In that area, licences do not have to be paid and yet people in the rest of the community have to pay their licence fees. I do not suggest that they should not pay; I suggest that everyone should pay.
A special calibre of officer is needed to go into some of the areas because he might be putting his neck on the block.

Mr. Chris Patten: Extremely committed and brave officers do such work and go into every area in the Province. I have discussed the problem with them. The hon. Gentleman makes serious and important allegations about individual firms and abuses. I hope that he will bring those cases to my attention and we shall pursue them in the normal way. General allegations are not worth much unless one has specifics on which to act.

Rev. William McCrea: I accept that the allegations are serious. As with other serious allegations, they have been brought before the House. It is appropriate and proper to exercise my right to draw the attention of hon. Members to these matters. I shall seek to do so as quickly as possible.
Whether or not the Minister accepts it, there are vast areas of the Province where few charges are brought against those fiddling the social services. I should be delighted if the Minister would reveal the figures. What charges of fraud are being brought, and how many stick?
I know that other hon. Members wish to speak. I have been glad of the opportunity to do so. Indeed, it would be wrong if I did not welcome funds for Northern Ireland.

Mr. James Nicholson: I wish to address myself to Class I, Vote 1. I welcome anything that improves the facilities of our agricultural colleges. However, I must make it clear that I only welcome improvement to the existing system—the funds should not be used to purchase additional land for the colleges.
An agricultural college in the Province recently bid for land against local farmers and the price rose to more than £3,000 an acre. It is bad enough when farmers make fools out of themselves by bidding land to exorbitant prices, but when they bid against the Department it is quite ridiculous. The Department does not have to worry about milk quotas, about the troubles in the intensive sector or whether the pigs will pay. Quite frankly, the farmer does not stand much of a chance. I hope that that will never be repeated.
There is sufficient land within the control of the Department in Northern Ireland, and the colleges should not need to bid against the farmers for additional land. There is no point in educating our young if, when they return to their farms, they cannot expand. Our young farmers must be given their heads and must be allowed to expand. When I left school I would have been severely disadvantaged if I had had to face the problems that many young people face today.
Our farmers are not allowed to expand their milk production—the one profitable area of agriculture where they can see a return month by month. More importantly, their bank managers can see that return. They can count on repayments being made against borrowing. The Government's present policy does not allow that.
Restrictions were announced last week on farm capital grants, and that will cause difficulties to the agriculture industry. I agree with the remarks of the hon. Member for Antrim, North (Rev. Ian Paisley) about the severe difficulties that will arise in Northern Ireland from the reduced grants. The hon. Gentleman talked about a £14 million reduction out of an overall reduction of £40 million. I received a written answer from the Minister of State, Ministry of Agriculture, Fisheries and Food in which he said that Northern Ireland will suffer a reduction of £13 million. I am sure that the hon. Member for Antrim, North will not disagree with me over £1 million. However, it is most unfair that the small six counties of Northern Ireland should be asked to bear one third of the reduction in the agriculture budget for the entire United Kingdom. I do not think that that proposal will bear scrutiny. I hope that the Minister will consider it further and tell us at a later stage why he thinks that it is fair. I shall be most concerned if the proposed reduction is implemented.

Rev. Ian Paisley: I am sure that the hon. Gentleman will agree that the estimate of the Ulster Farmers Union is not so very far out. We often find with the Ministry that £1 million is neither here nor there, but is of much greater concern to the farmers from whose pockets it will have to come.

Mr. Nicholson: I agree with the hon. Gentleman that £1 million would be considered extremely important by Northern Ireland farmers. It is only right that we should stress that Northern Ireland is expected to accept one third of the cut for the entire United Kingdom.
I direct myself to milk quotas, the buy-out scheme, the administration of the scheme and the consequent costs. Milk quotas have been with us for a short time but they

have caused many problems for farmers, politicians, the Government, those involved in the manufacturing industry, those engaged in the ancillary industries and those who depend on agriculture for their employment. We all know that there has been a reduction in employment because of the implementation of the quotas. I do not wish to repeat everything that has already been said about the quotas but there are many grey areas that must be clarified. I have spoken about those issues on a number of occasions in the House and unfortunately we have not found answers to many of the questions.
The production allocation of 65,000 tonnes remains the burning issue. In the first six months, Northern Ireland producers started paying in excess of £5 million in levy. I hope that there will be a ministerial statement this evening even if its effect is only to put off the evil day of reckoning. At least that will give us a breathing space to enable us to ascertain how things will work out as the months progress. No other part of the United Kingdom has any levy to pay, or has had to do so. The United Kingdom is still falling far short of the overall national quota that was determined as part of the Brussels agreement.
Many of us contend that the 65,000 tonne production allocation that was set in the Brussels negotiations never reached Northern Ireland. The Minister of State, Ministry of Agriculture, Fisheries and Food maintains that it did. The whole problem has been cloaked in mystery. I still cannot accept that we have been informed correctly, especially in view of the statement made by the right hon. Member for Bosworth (Mr. Butler) when he was the Minister of State responsible for agriculture. He made that statement during a dinner on 29 April at the Ulster Farmers Union and in numerous press releases issued by the Ministry of Agriculture, Fisheries and Food. The press release of the speech made at the annual dinner of the Ulster Farmers Union stated:
those who contributed most to the surpluses through increasing production since 1981 should stand the biggest cutbacks. Such a principle applied to Northern Ireland would have been little short of disastrous: a 15 per cent. cut in overall output against 1983. Under pressure from the United Kingdom the EC Agriculture Ministers agreed that Northern Ireland had to be specially treated. The result, as you know, was a special allocation of 65,000 tonnes to Northern Ireland. Then the Agriculture Ministries of the United Kingdom agreed a further special allocation; and the possible 15 per cent. cut was reduced to 6 per cent.
On 26 April 1984, the Minister replied to a question I raised by stating:
The 65,000 tonnes allocation has certainly gone to Northern Ireland. The allocation between the regions of the United Kingdom was initially based on 1981 levels of production, to which was added a special quota of 65,000 tonnes agreed between the EEC Agriculture Ministries. A further addition of almost the same amount was then agreed between the Ministers responsible for agriculture in the various regions of the United Kingdom." — [Official Report, 26 April 1984; Vol. 58, c. 875.]
Those two statements complement each other. They were not off-the-cuff speeches about a one-off possibility.
Where has the 1981 allocation plus 1 per cent. quota gone? Where has the amount from England, Scotland and Wales disappeared to? The Minister, who then had responsibility for agriculture, told us what would be the solution. That was the position of the Northern Ireland Department of Agriculture until the end of June this year. What changed all that? The position was changed in the House on 3 July. The Minister of State told us when presenting the regulations that it was not the 1981


allocation plus 1 per cent. quota. That milk would not flow from England, Wales and Scotland to Northern Ireland. I do not know whether the Government were forced to change the provision because of earlier discrepancies in the regulations. The Minister of State, Ministry of Agriculture, Fisheries and Food—the hon. Member for Norfolk, South (Mr. MacGregor) — replied to my question by stating:
The allocation of quota between the regions of the United Kingdom was based on deliveries in 1983, but in the calculations we have taken account of the trend of deliveries since 1981, and that includes the rapid growth in deliveries in Northern Ireland as compared to the other territories."—[Official Report, 3 July 1984; Vol. 63, c. 235.]
Therein lies the difficulty that faces Northern Ireland agriculture. The important phrase is
taken account of the trend of deliveries since 1981".
That proved to be important for Northern Ireland. It meant that England and Wales received a cut of 6·25 per cent. on 1983 production; Scotland received a reduction of 6·39 per cent.; but Northern Ireland received a reduction of 10·35 per cent. That reduction of 10·35 per cent—this is the argument that is put forward—includes the 65,000 tonnes, which brings us back to the reduction, on the 1981 figure of 5·83 per cent. Northern Ireland should not have been treated differently from any other part of the United Kingdom. The Government have used that excuse to justify their action. The spirit of the Brussels agreement was not honoured.
We have spoken of the trend in deliveries. That is what the figures are based on and the argument that is used. I gave the Minister of State some figures about the trend in deliveries in other areas. If other areas had received the same treatment as Northern Ireland, we should have had more difficulty in arguing our case. The islands of Arran, Bute, Coll, Tigh and Great Cumbrae increased their production by 14·4 per cent. The Orkneys increased production by 19·4 per cent. and the Shetland Isles by 26·8 per cent. between 1981 and 1983. I do not argue that the Orkneys and the Shetland Isles should not have received the consideration that they have. I have no doubt that they were entitled to that consideration because of their remoteness. The increase in production within the Aberdeen district milk marketing area was 11·7 per cent.
Will the Minister tell the House tonight whether the areas I have mentioned received a more severe cut based on trend in deliveries than other parts of the United Kingdom? He and I know that that is not what happened. That is how the Northern Ireland argument for fair treatment under the trend deliveries has arisen. Northern Ireland's isolated position within Europe and its difficulty in reaching markets means that we should have received the 65,000 tonnes that was awarded to us in Brussels. We did not receive it, and that is our main problem.
That places Northern Ireland dairy farmers at a serious disadvantage compared with their counterparts in the rest of the United Kingdom. The figures that I have given illustrate that. Northern Ireland's case for the 65,000 tonnes is accepted by everyone but the Minister. He appears to be the only man living who does not accept it.
I shall refer the Minister to a good booklet produced by the Select Committee, which deals effectively and efficiently with the problem of the Northern Ireland milk quota. The Select Committee called upon the Minister to clear up the matter, not tomorrow but immediately. I reiterate that call tonight.
I should like to refer to the buy-out scheme and its effects. In reply to part of a speech that I made on 3 July, the Minister of State, Ministry of Agriculture, Fisheries and Food said:
In addition, I hope that the hon. Gentleman has noted that we have selected Northern Ireland for special treatment under the outgoers scheme. As a result of buying out 5 per cent. of Northern Ireland in the outgoers scheme, as opposed to 2¼ per cent. in Great Britain, we shall be spendng £4·73 million more in Northern Ireland than if we had applied the same percentage as in the rest of the United Kingdom. We have adopted this approach because we recognise the special problems of Northern Ireland, which include an especially high number of small producers. That is why we have given it favourable terms under the outgoers scheme."—[Official Report, 3 July 1984; Vol. 63, c. 235.]
After what the Minister of State, Northern Ireland Office, told us about the amount that is available in the outgoers scheme, the amount of milk that is to he bought appears to have diminished. We were told that the outgoers scheme would be a panacea for the dairy problem in Northern Ireland. However, we find that it has not worked. It was never going to work, and we cart now say that it has not worked. Why? Because the farmers of Northern Ireland, who depend on the milk industry, could not afford to take up the scheme. They had to cut back to the required level because there was no other option for them. They could not expand into grain or any other part of agriculture as farmers could in other parts of the United Kingdom.
I ask the Minister what proposals he has to make up the shortfall to which the Minister of State referred on 3 July. We were told that the scheme would be the panacea to solve the problem. What proposals does the Department have to make up the shortfall? If I understand the Minister correctly, there are roughly 50·7 million litres of milk left to Northern Ireland. We have been given the figure of 5,000 litres per cow. I hope that my hon. Friend the Member for Antrim, East (Mr. Beggs) is right in his calculation, when he tells me that that means that there are 10,000 cows to be shared out among all the farmers who are competing daily at Dundonald house for quota. That means that there are about 15,000 or 16,000 litres per applicant, in special cases. However, those are only rough figures. If that is so, I think that the Minister will not disagree that it will not solve the problems—and they are great; they are vast. I sometimes shudder when I wonder how they will be solved.
Daily, I receive telephone calls from farmers, not only in my constituency but outside, asking me how they can improve their position. They tell me the position that they are put in by the Department of Agriculture schemes in which they have participated in all sincerity. They tell me that they have purchased land on the strength of increasing their dairy herd and making the repayments. I cannot reply adequately to the farmers. I sincerely hope that the Minister will tell us that there is a chink of light at the end of the tunnel, because 50 million litres is nowhere near what is required to deal with the problem in Northern Ireland.
I should like to refer to farmers in the rest of the United Kingdom in a similar position, who have applied to participate in the scheme. From what the Minister told us, I do not know what percentage a farmer who has achieved a secondary quota will receive in the final analysis. I doubt whether even the Minister knows. We shall be shocked and dismayed, and there will be even more anger and


resentment if farmers in the United Kingdom get 100 per cent. of secondary quota while farmers in Northern Ireland receive only 40, 50, 60 or 70 per cent.

Mr. Ken Maginnis: Or 25 per cent.

Mr. Nicholson: That may well be, but I did not want to go that low. That would be unacceptable to the farmers of Northern Ireland, just as I hope it will be unacceptable to the Minister.

Mr. Maginnis: I do not want to distract my hon. Friend, but is he aware that a particular problem affects a limited number of dairy farmers which under the present system seems to be insoluble? That is the problem of dairy farmers who over the past eight, 10 or 11 years have, through terrorism, been forced to leave farms that are close to the frontier with the Irish Republic. They have held on to their land in the hope that the violence would decrease and they would be able to return to continue dairying, which they have done for generations. But when they go to the Dairy Produce Quota Tribunal to argue for a quota, they are told that as they have stopped milk production, perhaps 10 years ago, there is no basis on which their application can be judged. Consequently, they are penalised yet again. They have received no compensation for being forced to move from their farms because of terrorism, nor have they any hope of returning to continue their farming if things improve.

Mr. Nicholson: I thank my hon. Friend for his valuable and learned contribution. He makes a valid point. The Minister has no doubt listened to it and will perhaps in due course comment on it. It is a matter that will cause concern to the farmers placed in that invidious position.
It is fair to say that no other bureaucratic body, in an attempt to solve one problem, could have created a greater one. The EEC, with which we are all saddled, has forced a monster on us. Day after day, farmers throughout Northern Ireland travel to Dundonald house to face tribunals in an attempt to secure secondary quotas, but the number of such quotas is insufficient. They must all fight for the small amount available. I must express my distaste and anger at the cost of administering and processing these, appeals. It is a total waste of public money and is unjustifiable, even though those attempting to administer the regulations have a difficult and thankless task which I do not envy. The total cost is £370,000—£220,000 to run the panels and tribunals and £150,000 to the Milk Marketing Board to administer any awards that may result. When that is placed against the £800,000 which was set aside for the buy-out scheme, it means that almost half of the amount which was to be paid to farmers is being spent on administrative and bureaucratic nonsense. This has been brought down on our heads by what I consider to be the worthless organisation known as the European Economic Community.
It has been brought to my attention that there are apparent discrepancies in the awards which are made to Northern Ireland farmers. If the tribunals were able to demonstrate a 100 per cent. success rate, I have no doubt that everybody would be assured that a fair allocation had been achieved, but that is not possible. Farmers come to me and say that they have been treated unfairly. There

must be another way in which to look at the small number of cases where farmers believe that they have been treated unfairly. Having fought a large number of cases at tribunals, I believe that there are some cases that do not appear to have received a fair and just reward.
I welcome the continuing aid that is to be given to the pig and poultry industry. Given help, these two industries will have a chance to survive. However, I am most unhappy about the Department's attitude towards the intensive sectors of agriculture in Northern Ireland. If they put their mind to it, ways could be found by which intervention grain could be brought from Europe to Northern Ireland. Farmers could also be encouraged to grow more grain. Although we may never be self-sufficient in grain, Northern Ireland could be encouraged to become more self-sufficient than it is now. This must be one of the top priorities for the Minister. This policy would not only help the agricultural industry but would also have spin-off effects. Intensive sectors of agriculture in Northern Ireland would result in an increase in employment throughout the length and breadth of Northern Ireland.
Marketing must be improved. However, to say that marketing must be improved could be used as a very lame excuse to justify areas where marketing is bad. Although marketing must be improved, it must be improved in conjunction with proper and planned expansion. Agriculture in Northern Ireland is showing more foresight than was shown in the past. However, it must show more determination to improve. That has been lacking for a long time.
I am not very happy about the way in which the SPP has been established. It is yet another quango. The House knows my views on nominated boards and quangos in Northern Ireland. There are far too many of them. This is yet another quango. Because of my prejudices, it may be that I am being totally unfair to it. However, I should like producers to have a greater say. They must not be abused. Similarly, the SPP must not be abused by those who have been appointed as members. I ask the Minister to keep under scrutiny at all times the funds being spent by the SPP. I hope that the special land improvement scheme will ease some of the burdens, especially by means of a reduction of the farm capital grants in Northern Ireland.
The main problem of the past nine months is that we have been so involved with milk quotas that we have not paid enough attention to other equally important problems facing agriculture in Northern Ireland. For example, we have not paid enough attention to the intensive sectors or to the beef sector. Agriculture is Northern Ireland's largest and strongest industry. I hope that Ministers will work hard to ensure that it survives and flourishes.

10 pm

Mr. William Ross: The guide to Supplementary Estimates for services in Northern Ireland gives a number of reasons why such Estimates may be produced.
The reasons include securing
the authority of Parliament to use money already voted for particular purposes to meet expenditure on other services within the same vote. This is commonly done when the allocation is substantial, likely to be controversial or involves a new service. In other cases, the authority to approve reallocations of this sort … has been delegated to the Department of Finance and Personnel.


I can understand the need for Supplementary Estimates when there is a new service or when a matter is controversial, though what is controversial may be a matter of opinion. However, I should like an explanation of what "substantial" means. Is it substantial in relation to the sum involved, or substantial as a percentage of the sum originally allocated for a service? Given the differing sizes of the sums allocated, I cannot see that they can all be regarded as substantial.
A number of hon. Members have spoken about the problems created by the milk quota system and about the changes in farming grants. In a press notice on 12 December, the Secretary of Stale for Northern Ireland said:
The planning figure for Agriculture for the coming year was increased in last year's Survey to allow for local support to be maintained at a substantial level.
When one realises that the support for certain schemes has been cut by at least £13 million, one wonders what the Secretary of State meant by "a substantial level". There appears to be a considerable decrease, both in total sums and in the percentage of the public input into Northern Ireland farming.
A Ministry of Agriculture, Fisheries and Food press release said that there would be an increase in the money available for work on hedges and for other schemes. I find it difficult to believe that there will be so little extra money for that work that the overall decrease in the rest of the United Kingdom will be as small as it appears to be. I also find it difficult to understand how as much as two thirds of the decrease will be in Great Britain. I find it impossible to visualise the farming community in Great Britain being so sparse in its grant aid schemes that only £26 million or £27 million will be chopped, while in Northern Ireland we are so anxious to spend money that we lose £13 million. We need a full explanation of how that has happened.
We must look beyond farming when we consider the sums of public money that are being invested in it. The cut will mean that schemes which were reasonable to carry out at the higher rate of grant are no longer viable. We are not considering a cut in spending of £13 million but a much larger cut in public and private spending. That is bound to have a wider effect than is generally realised. When farmers undertake a drainage scheme, they buy pipes, which provides employment right back to the smelt works, and considerable amounts of gravel. All in all, schemes provide an enormous amount of labour. That trend is echoed throughout agricultural grant schemes. When the Minister considers the loss to the commercial life of Northern Ireland, he will find that it would have been better never to have made the saving. The volume of work in Northern Ireland is such that one third of the United Kingdom's savings is made there.
Land reclamation schemes have been retained in Northern Ireland when they have been wiped out in the rest of the United Kingdom. I cannot believe that the differences in agricultural practices in Northern Ireland compared with Scotland or hill areas in England and Wales are such that there is no need for the work to continue.
I cannot envisage how much worse off Northern ireland would have been if land reclamation grants had disappeared there as well. We are to lose £30 million. How much more would we have lost if the land reclamation scheme had also been wiped out? We were told that it was kept in Northern Ireland because it was essential to maintain incomes. What is the Government's thinking

regarding farm incomes in Northern Ireland over the next few years? I think that the Government expect a decrease in farming incomes and that they are saying to the farming industry that it must learn to sustain itself in a much harsher economic climate. The Government talk about maintaining incomes, not increasing them. If it is necessary to maintain hill land incomes — that is basically where land reclamation work takes place—the Government are expecting a decrease in farm incomes generally.
Finally, I shall quote a passage from the MAFF press release for supplies to Northern Ireland. It states:
The changes will come into effect immediately in respect of expenditure under the AFIGS incurred after December 11, and new applications or variations under the AHDS, and variations under the FHDS, received after that date.
Is it normal that such expenditure changes should come into effect immediately under the AHG scheme, but only in respect of new applications under the other two schemes? If this is a departure from normal practice, we should be told how it will affect the schemes that farmers already have in hand. If it represents a change, why has it been introduced now?

Mr. A. Cecil Walker: I join my hon. Friend the Member for Mid-Ulster (Rev. William McCrea) in welcoming the new Minister State, the hon. Member for Brent, North (Dr. Boyson), to his first debate on Appropriation in aid for our beleaguered Province. In the short time that he has been with us, our new Minister has pursued his brief with flair, sympathy and understanding, and he has shown great readiness to come to grips with the many complex problems of his Department. My remarks in this debate will be directed to the Under-Secretary of State, the hon. Member for Bath (Mr. Patten), who has made many fact-finding visits throughout the Province. His dedication and his wide knowledge of the matters dealt with by his Department are well known.
I refer first to Class X, Vote 1. I note the Government's anxiety about unemployment in Northern Ireland, which is shared by all those who represent the Province. I support most of the measures announced in the public spending plans, and note that there has been a slight increase over expected inflation. Although that will not improve job prospects, it will at least maintain those that we have. It is regrettable that law and order expenditure has reached such proportions, but the provision of another 500 jobs in the police force is at least a consolation.
I welcome the Government's approach to the measures outlined in Class X, Vote 2, and their recognition of the fact that additional expenditure is necessary to combat the social deprivation caused by our geographical location, the civil unrest in the Province and the poverty with which we must contend. It is generally accepted that Northern Ireland is the most deprived area of the United Kingdom. As a result, families derive substantially more of their incomes from benefits, while at the same time they must pay more for food, clothing and fuel.
I am pleased about the introduction of the severe disablement allowance, which will replace noncontributory invalidity pensions, but I am disturbed by several aspects of the implementation of the criteria. I realise that there must be a test for incapacity, and I am glad that the Government have given a lead by publishing


the document entitled, "Guidance in Adjudicating for Medical Practitioners", which will be available at all DHSS offices.
Nevertheless, some cases will be more complex than others, and I am worried that people who could qualify for benefit now will not qualify because they do not meet the 80 per cent. disablement test, although they may be incapable of working. I agree with my hon. Friend the Member for Belfast, South (Rev. Martin Smyth) that people who are severely incapacitated should not have to prove such incapacity from time to time to retain their right to benefit. I should have thought that where medical records showed a permanent incapacity, such persons should not be required to present themselves at tribunals, which subjects them to a painful and exhausting experience with which they are completely unable to cope.
I am glad that in section F1, of the Autumn Supplementary Estimate for 1984–85 the Government have responded to the needs of the aged for help with heating costs. I draw attention to the plight of those elderly who have homes which are difficult to heat. Many of these are large family homes which are ideal for bringing up families but which have deteriorated and fallen into disrepair after the families have grown up and moved to homes on their own. In most cases there is no alternative accommodation available to those who are left behind. These people are left to live in unsuitable houses and such grants as are available for extra heating are soon exhausted, particularly as the price of coal is £10 per tonne more than on the mainland.
In section F2, I note that there are an increasing number of claims for single payments. There are many and varied circumstances when a single payment is necessary, but, as has been said, the system can be abused. My hon. Friend the Member for Upper Bann (Mr. McCusker) said that in many parts of Belfast there is evidence that crooked so-called business men are ripping off customers who come to them with welfare cheques issued under the single payments system. In my constituency, I have had reports of people being given substandard and secondhand articles not worth a fraction of the grant, and when people discover that the articles are not of an acceptable quality, they are told by these unscrupulous traders that their guarantee ended when they walked out of the store.
Another abuse of the system occurs where young people have applied for accommodation as a single person. On being allocated a flat, which is usually in a hard-to-let area, they immediately apply for a single payment for furniture. However, in most cases the allocation is not taken up and the recipient uses the grant for purposes other than that for which it was intended.
A matter that is worthy of consideration is the plight of prisoners' wives and families who wish to visit their relatives in prison. Most of us know that prisoners are allowed one visit per week, but close relatives can claim the cost of their journey to prison only once every four weeks. Therefore, it is distressing that the family entitlement to visit cannot be maintained where there is financial hardship, particularly among wives of ordinary, decent criminals who do not have access to, or wish to avail themselves of, paramilitary transport.
Section G deals with housing benefits. Attempts are being made to implement the system fairly for everyone who is eligible for help. The amended scheme now brings

Northern Ireland generally into line with Great Britain. I note that there is now a high level of local liaison between the Northern Ireland Housing Executive and its social security counterpart. Such a liaison highlights cases where supplementary benefit could be claimed, and the fact that the persons concerned in these cases are now advised about their entitlement is a step forward in the take-up campaign.
It has been recognised that the housing benefits scheme has had a smoother introduction into Northern Ireland, with fewer problems, than in many other parts of the United Kingdom, and the Government must be commended for their efforts in this direction. However, some Housing Executive tenants, although they appear to be gaining the benefits to which they are entitled, are nevertheless forced to live in houses which either need replacing or need expensive repairs. These are the tenants of the Orlit and similar types of houses. I ask that the executive announces its timetable for dealing with such houses.
Section A covers old pensions. Even with linked increases, inflation and increased costs are substantially reducing the real value of pensions. Any Government decision to impose VAT on printed products would undoubtedly affect them, as would an increased television licence fee.
The proposal that doctors should be obliged to prescribe medicines from a restricted list worries me. Unsuitable drugs might be prescribed which could put the lives of elderly persons at risk. The proposal must give cause for alarm. I hope that the implications of the proposal for this most deserving section of our population will be examined fully.

Mr. J. Enoch Powell: I shall refer to two specific matters falling within the ambit of the order and then I shall come to two constitutional issues.
I had not meant to refer to Class X, Vote 2, until I listened to my hon. Friend the Member for Upper Bann (Mr. McCusker). Now that I have heard him, I want to underline what he said on the subject of the attendance allowance.
The hon. Member for Bath (Mr. Patten) must be beginning to detect a certain uniformity running through much of the correspondence that he receives in his capacity as being in charge of health and the social services. I find myself writing to him rather more monotonously repetitive letters on this subject than I would wish, and I am sure that someone as sensitive as the Minister is to administrative implications will long ago have arrived at the conclusion that something must be wrong somewhere.
Something is wrong when one finds so often the irresolvable conflict between the advice given by the family doctor of an applicant and the conclusions arrived at by the doctor who examines that applicant in the course of an appeal.
There is somewhere in the application or the administration of the rules for attendance allowance a deficiency which is subjecting applicants to a great deal of harassment in the cases where they are ultimately successful—there are some of those—and is denying to other applicants the assistance to which they and their families were always intended to be entitled. I hope the


Minister will say that he intends to clear the board and address himself afresh to the administration of the scheme to find where the gremlin in it is.
Included in the matters falling under Class I, Vote 2, is the "improvement of livestock" and the "control of diseases". It is in that connection that I draw attention once again to the control of veterinary medical products because—and I quote the submission made to me by the Ulster Farmers' Union—
it is a matter of concern to our own producers that certain materials in this field are under strict control in Northern Ireland, but not of in the Republic … the bona fide trade … is … disquited about the traffic in medicinal products which is apparently going on from the Republic to the Province.
It is not seriously disputed that the application of existing EEC rules in this respect leaves much to be desired on the other side of the frontier but is accurately observed in the United Kingdom. I tabled a question in October in which I asked the Minister of Agriculture, Fisheries and Food what he was doing about that. I have abbreviated the terms of the question, but the Minister's reply was even briefer. He said:
This is a matter for the European Commission, and we have written to the commission about it." —[0fficial Report, 31 October 1984; Vol. 65, c. 1114.]
That is not the sort of reply which most of our constituents would long tolerate about 'a grievance which they had put before us. It is not good enough for the Minister to have written to the Commission about it, if he has left it there. Therefore, I hope that when the Minister replies he will be able to confirm that that matter is being directly and actively pursued with the Commission with a view to bringing into line the country which lies across the border from Northern Ireland.
One of the main topics in this debate has been the working out of the milk quota scheme. Whatever else can be said about it—there is not much that is favourable—it is certain that it has caused an enormous amount of irritation, misunderstanding, disquiet and sense of injustice. How the scheme was going to work, how it was going to be applied, what the meaning was of the various assurances that had been given from stage to stage, remained obscure and in some cases remains obscure to this moment.
It occurred to me to investigate why it was that a scheme which affected the whole farming industry in the United Kingdom, and which affected differentially the farming industry in Northern Ireland, should still remain in such confusion and obscurity for nine months after its introduction. The reason is not far to seek, and it should not be far to seek, above all, here in the House.
The seeker after enlightenment on the working of the milk quota scheme requires to deal with three fundamental documents. They are all EEC regulations. The first is regulation 804 of 1968. The second is regulation 856 of 1984. The third is regulation 857 of 1984. By a careful reading of those three documents one can, at first dimly and then with increasing clarity perceive the outlines and the underlying principles—which are even, arguably, in some respects rational—of the milk quota scheme.
They are a remarkable collection of documents. Regulation 804 of 1968 set out, as I have said, the principles. In our language it would be called the principal Act—it is the CAP for milk—I am sure that that is an unofficial description—and it is constantly referred to in the documents which immediately impinge upon the farming industry in Northern Ireland and which repeatedly

refer to paragraph 5 of the principal regulations—to the bewilderment at first of the student who finds no resemblance between article 5 of that regulation and what is being talked about. What has escaped his notice is that regulation 856 of 1984 virtually rewrote, or wrote a whole new regulation into, article 5 of the principal regulations of 1968. On that article as amended was built the trigger regulation 857.
One fact which is common to all those regulations is that they are Community legislation directly applicable in the member states. Each of them is directly applicable — the CAP regulation, the amendment of the CAP regulation, and then the inauguration of the milk quota scheme—it is all legislation made in Brussels which automatically takes effect in this country.
It seems self-evident that such legislation when it reaches into the very lives and farms of individuals in the Province will not be understood—that is almost to say, it simply will not be accepted — until it has been properly and publicly debated in this country. There is one sovereign way — that is not intended as a pun — of getting such matters properly understood and debated. That is to bring them before the House. But because of the EEC's legislative procedures, all that was involved in the milk quota scheme—how it would work, how it would impinge on individual farms — how the quotas were assesed and how the levy was to be drawn—was never thrashed out on this side of the English channel. The matter was never thrashed out, and, therefore, never properly understood, let alone accepted, because it did not have to come before the House. It did not even have to go before a Scrutiny Committee.
It is for another debate to declaim against the directly applicable legislation of the EEC. Suffice it to say tonight that we and the dairy farmers of the whole United Kingdom, and especially of Northern Ireland, have learnt by an object lesson just what it means to be legislated for by a foreign body which imposes its decisions, in effect, by decree.
I turn to another constitutional matter—one that it is within the Government's power to deal with. We are given to understand that the Government are in some difficulty over their programme for the current Session. That has been brought to our attention by the unprecedentedly early date at which we are to terminate our Christmas holidays and return from all the oceans and continents of the world to resume our deliberations on Wednesday 9 January. The Government are short of time—the very predicament most feared and dreaded by all Governments, particularly by all Government business managers. Yet in every Session three whole days in effect are devoted by the House to the business of appropriation orders such as that which has claimed our attention since about 7·.30 pm tonight—there is still another hour to go, if we can find the means to apply Parkinson's law. One might think that some useful or necessary purpose was served by such orders. Those hon. Members who are anxiously wondering how soon the Division will be must naturally assume from the fact that they are about to be marched through the Lobbies that those parliamentary days are being used for some practical—I do not say "good", as I put the matter more modestly—purpose. Not at all.
It is not in order to provide these sums for expenditure in Northern Ireland that such orders are brought before the House. The sums eventually come out of the Consolidated Fund of the United Kingdom anyhow and would continue


to do so, subject to the decisions of the House, even if these orders were heard of no more. Nor are these orders brought before the House to give Northern Ireland Members an opportunity to air their constituents' grievances on major matters of public concern. If they were, that would be a signal and peculiar instance of generosity towards Northern Ireland and its people on the part of those who sit in the seats of power. Not so: if this order was not taken tonight and if this procedure was disused, my hon. Friends and I would still be raising exactly the same subjects, perhaps with a little more concision and thereby a little more force, in the debate which is to be held on Wednesday.
No, Sir; the only effect and purpose of this expenditure of parliamentary time and effort on appropriation orders for Northern Ireland is to preserve an ancient absurdity —the Consolidated Fund of Northern Ireland. This is a "Consolidated Fund of Northern Ireland Preservation Order." That is what it is about.
Since the Consolidated Fund of Northern Ireland performs no ascertainable financial function, being only a receptacle into which money is poured in order that it may be poured out again, hon. Members may still be inquisitive to know why the Government attach so much importance to preserving this ancient and fatuous institution that they will spend three good days of parliamentary time per Session in preserving it. And, indeed, hope is growing that the Government are approaching the time when they will no longer wish to preserve the Consolidated Fund of Northern Ireland.
The original purpose of conserving the fund, with which this pantomime started some 12 years ago, was that Northern Ireland might, as far as possible, be a separable entity which could be floated off in the direction of an all-Ireland state. It was to render it essentially self-contained and separable that it was given the same sort of distinct Consolidated Fund and financial organisation as a self-governing dominion, in the hope that one day it would take itself off and go somewhere else.
That motive was disposed of with striking and beneficent clarity by the Prime Minister during and following the recent conference at Chequers. We know now, in a way that we did not previously know, that that is not the Government's intention.
Perhaps it might be said that Her Majesty's Government are still anxious to provide Northern Ireland with another Stormont — Stormont back again with Stormont's Consolidated Fund.

Mr. Chris Patten: indicated assent.

Mr. Powell: The Under-Secretary of State, clutching at a straw, thought just now that he heard something in my discourse with which he could safely be seen to be agreeing. I suppose that the Minister "indicates assent" will duly appear tomorrow in the appropriate column of Hansard.
That is also out of date, however, because the new Secretary of State for Northern Ireland has been brutally candid. With brutal candour he has explained the terms upon which—and upon which alone—administration or legislation will be devolved to the Province. They are conditions upon which there is no prospect of a devolved constitution being accepted or worked; and I do not think that the Secretary of State or Her Majesty's Government generally—if for such a purpose one can take them as a generality—are so stupid as to suppose otherwise.
So at last we have worked through to a time when the House can, without any loss whatsoever, be deprived of this tri-annual entertainment, a time when the business managers of the House can gain three days, a time when it is no longer thought necessary for any purpose —attainable or unattainable—to preserve the Consolidated Fund of Northern Ireland.
My hon. Friends and I, in expectation of that day and by way of giving, to this Government so far as is in our power, a gentle nudge from time to time in that direction, have made a habit in the last two years of marking our disapprobation of the motives behind this legislation, by voting against it. After all that, it should not come as any surprise either to the Whips or to the Ministers, to hear that we intend to do likewise tonight.

Mr. Stuart Bell: The right hon. Member for South Down (Mr. Powell) referred to our proceedings as a triennial entertainment and as a pantomime. As the festive season is approaching, I prefer the description of a pantomime. Like the Minister of State, I have spent some time reading in the Hansard the record of the debates on Appropriation orders. Having read them, I was surprised that such dehydrated topics as milk quotas, levies, outgoers schemes, and the quality of beef cattle production could be so interesting and scintillating. I shall seek to make equally cogent arguments on the same manifold subjects, although I doubt that I can match the level of articulation of other hon. Members.
Class I, Vote 1, of the supplementary Estimates spell out clearly the nature of the supplement as it relates to agriculture. Class I covers the administrative cost of the new milk quota arrangements and the compensation scheme for farmers who want to give up milk production, thus releasing quotas for reallocation.
The hon. Member for Antrim, North (Rev. Ian Paisley) drew the attention of the House to the considerable bitterness about the quota arrangements in Northern Ireland. He declared that the jewel of our Northern Ireland industry had been kicked into the gutter. I originally thought that that was a mixed metaphor, but the industry would not be the worse for that — in fact, it was an accurate description of how some of the farmers feel about the quota arrangement, reallocations and penalties.
The reason for the bitterness was that the Government had announced that the first instalment of the levy on farmers who had exceeded their quota must be paid, notwithstanding that the European Commission had said that four member states had not implemented the regulations. The Minister was kind enough to tell the House that while the Government were fully committed to the mutual supplementary levy agreed by the Agriculture Council in March, Belgium, the Netherlands, the Republic of Ireland and the Federal Republic of Germany had decided not to pay any levy because there appeared to be a confusion over the interpretation the rules. Only West Germany has collected some portion of the levy. It was a timely intervention that may assist in alleviating some of the bitterness felt by the farmers in Northern Ireland.
The Minister also took the opportunity to tell the House that he had sympathy with farmers who were attempting to make unwelcome and difficult adjustments. One additional source of bitterness is that no levy will be payable in Britain because of the summer drought that resulted in a drop in milk production. Production also fell in Northern Ireland—down 6 per cent. since April—but total production will still exceed the quota and up to 5,000 farmers will face the levy payments. The Ulster Farmers Union has claimed that individual payments could be as much as £20,000. The average will probably be more like £1,000 per farmer. The Government have estimated that about 2,000 farmers will exceed their quota.
The Northern Ireland farmers are bitter about the Government's decision to collect the payments—they may now be held in abeyance—because they feel that they never received the 65,000 tonne special allocation granted by the EEC specifically for Northern Ireland. That was referred to by several hon. Members. They believe that the special quota was subsumed into the special quota

allocated to the United Kingdom overall. This issue was touched upon by the hon. Member for Antrim, North. I shall not attempt to untangle the entangled questions of milk quotas and levies as expressed and interpreted by the European Community and its Agriculture Council. Grievances may be perceived as well as being real; and I am sure that the Under-Secretary of State will wish to take an early opportunity to elucidate the true facts.
The Minister of State has said that 3,430 producers have applied for special treatment as hardship cases and that the claims are still being evaluated. In the meantime, producers who regard themselves as eligible for special treatment do not know whether they will find themselves in excess of the quota. The Minister has said that decisions have been taken in 1,788 cases and that provisional awards have been made in 540. He explained that the remainder would be dealt with over the next few weeks.
There is considerable confusion over the nature of the quota and whether it will be a salable asset. I understand that 595 farmers in Northern Ireland have applied to stop milk production and that the Government have said that all valid applications will be accepted. The 595 applications will yield 53·3 million litres.
In Class X of schedule 1 the sums to be paid out by way of expenditure by the Department of Health and Social Services on important items such as old-age pensions, attendance allowances and non-contributory pensions amount to £26·118 million. That figure must be seen against the overall background of social security in Northern Ireland. According to information provided by the Confederation of Health Service Employees in Belfast, social security statistics on the payments of sickness benefit, invalidity benefit and non-contributory invalidity pension show a level of demand in Northern Ireland that is 66 per cent. above that in Great Britain.
According to the same source, the incidence of severe disablement or incapacity based on attendance allowance statistics for Northern Ireland is 35 per cent. above the figure for Great Britain. There are higher birth rates and levels of infant mortality and handicap in Northern Ireland than elsewhere in Great Britain. There is a higher incidence of mental handicap. The level of new outpatients seen in Northern Ireland in 1982 was 51 per cent. higher than the comparable Great Britain figure. There is also a higher incidence of congenital abnormality and in 1981 deaths from this cause were 16 per cent. higher than those in England.
We welcome the fact that under the Health and Social Security (Northern Ireland) Order 1984, severe disablement allowance will replace the non-contributory invalidity pension. We welcome equally the fact that the severe disablement allowance—the SDA— is for those who cannot work because of long-term sickness or disability and who have not paid enough national insurance contributions to qualify for contributory sickness benefit. It is to be welcomed that it is not means tested and is tax-free.
The Minister of State rightly said that the Supplementary Estimate of £26·12 million represents an increase of 6·3 per cent. on the original provision and declared that the largest increase sought is for supplementary benefit. We welcome, too, the reasons for the increase, which is a reduction from 70 to 65 years of age as the upper qualifying age for related heating additions and the introduction of a new, higher age-related rate. The Minister referred to an addition of £7·8 million


for housing benefits. The reason for this additional supply is the increase in the number of eligible claimants and the increase in average weekly rebates and allowances.
The House has heard several criticisms of the housing benefit scheme. The hon. Member for Mid-Ulster (Rev. William McCrea) pertinently asked how the housing benefits points system is working. He declared that rents were being increased again. We note that under Class X the increase to cover rent rebates, rent allowances and rates rebates is the net result of a rise in the number of eligible claimants, and that this has been partly offset by changes in the housing benefit scheme, which has reduced the extent of the assistance.
The Parliamentary Under-Secretary of State will be well aware of the fact that the impact of the housing benefits scheme in Northern Ireland has given rise to some anxiety and criticism from hon. Members with Northern Ireland constituencies. Allegations are made that, because the scheme's administration is shared between the Department of the Environment, the DHSS and the Northern Ireland Housing Executive, there are serious cases of administrative failure. People feel that the housing benefits scheme has been based on a novel principle—robbing one set of claimants to pay another. It is therefore not surprising that the housing benefits scheme was rejected by all political parties when it was proposed for Northern Ireland. The Parliamentary Under-Secretary of State took that aspect into account when he gave a clear undertaking to the Northern Ireland Assembly that no supplementary benefits claimant would be worse off because of this reform. We trust that that will be the case.
We have had an interesting and long debate. It has been well attended, in the way such debates are, by those hon. Members who have listened to most of the speeches. The Labour Opposition support the order. We accept and understand the principle put forward by the right hon. Member for South Down, who wishes to make a constitutional point about the Appropriation order. The Labour Opposition believe in public expenditure as a principle. We believe that it helps to alleviate distress and that the appropriation order will assist those recipients of non-contributory benefits. We welcome the fact that more people will receive the severe disablement allowance than received the non-contributory invalidity pension. We welcome the £800,000 for attendance allowance, although we take on board the criticisms that have been made. We welcome the fact that married women can claim the disablement disallowance, even if they are about to carry out normal household duties.
We accept that there is confusion about the milk quotas and take on board the point made by the right hon. Member for South Down about Common Market legislation. The right hon. Gentleman said that these matters are decided elsewhere and give rise to different interpretations throughout the Common Market because we deal with many different nationalities, languages and technical matters that are difficult to grasp. We accept the new input into agriculture and understand the importance of agriculture to the economy of Northern Ireland. Every help should be given, and the Supplementary Estimates go some way towards giving that help.

The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Chris Patten): I believe I am right in saying that I have enjoyed the privilege of responding to every debate on Northern Ireland Appropriation orders since the last general election. I suppose that if I am particularly fortunate I shall be able to notch up the dubious record of replying to every Appropriation order debate during the entire Parliament. I realise that, for constitutional reasons at least, the right hon. Member for South Down (Mr. Powell) would not be too pleased with that idea, but that question is, of course, not entirely in my hands.
I welcome, as I am sure do all hon. Members, the hon. Member for Middlesborough (Mr. Bell) to our debates. I am sure that he will learn to enjoy them as much as the rest of us do. As on all these occasions, we have had a good and lively debate, which has ranged to the furthest limits of the order. The order is more limited in scope than some that we have considered in the past, but, nevertheless, the debate has covered a wide variety of subjects. I shall try, once again, to respond as adequately as I can to the main points raised. As usual, when I cannot cover a point today, or if I inadvertently pass one by in the night, I shall try to ensure that the hon. Member concerned receives a suitable reply as soon as possible from me or from one of my right hon. and hon. Friends.
A number of hon. Members have referred to social security. I shall make one or two general remarks about the Government's record on social security benefits in Northern Ireland, in view of what the hon. Member for Belfast, North (Mr. Walker) said in his customarily well-informed speech.
We shall spend about £1·2 billion on social security benefits in the current year. As the House is aware, it is our policy to maintain parity with Great Britain in the rates and procedures applying for those wide-ranging benefits, and I believe that that policy has served Northern Ireland well.
At the same time, when we introduced housing benefits, which the hon. Member for Middlesbrough mentioned, in November 1983, which was a benefit system which allowed some measure of local discretion within the national framework, I was able to provide some local enhancement of the scheme; for example, a more generous transitional protection against losses, the inclusion of water charges within rate rebates and allowances and, for the time being, more generous needs allowance for children. We were also able to tailor the administration of benefits to local circumstances. Northern Ireland has a more localised network of offices than elsewhere in the United Kingdom, and uniquely unemployment and supplementary benefits are delivered from the same local office.
The take-up of benefit in the Province already compares favourably with that in Great Britain, and is demonstrably higher in some cases. We have run some successful media campaigns in relation to particular benefits. More can and should be done. I have recently announced an extension throughout the Province of the information and advice service, which was successfully piloted in some of my Department's local social security offices.
Over the next year each local office will provide a separate advice point at which members of the public can


obtain information about the range of benefits available. We are also introducing a freephone service for those who cannot easily visit their local offices.
These developments have been welcomed by many local representatives and have been commented upon favourably by the Social Security Advisory Committee, whose close interest in Northern Ireland I greatly appreciate.
In these ways, and assisted by a flourishing welfare rights movement in the Province—a point to which I shall return in the context of the remarks of the hon. Member for Upper Bann (Mr. McCusker) — we are doing everything that we can to ensure that benefits reach everyone entitled to them. These efforts depend heavily upon the splendid and dedicated staff administering benefits in our local and central offices. I am pleased that hon. Members from Northern Ireland have often paid deserved tribute to their work.
The hon. Member for Upper Bann mentioned three matters on the social security Vote. I agree with him and the right hon. Member for South Down that attendance allowance is an extremely valuable benefit in that it can make the difference between an elderly or disabled person staying at home and having to be admitted to hospital. The view of the claimant's general practitioner is taken into account by the examining doctor, who must be satisfied that the conditions attaching to the allowance are met.
I accept the point made by the right hon. Gentleman about the administration of attendance allowance, on which, as he said, we have had a good deal of corresponsdence. I have had a good deal of correspondence on the subject with every hon. Member representing the Province. I am therefore prepared to consider further how the allowance is administered. I shall do so against the background of the Oglesby report, which reviewed the procedures for that and other benefits in Great Britain. I shall also consult the Attendance Allowance Board, which plays an important part in administering the scheme. If there are any gremlins still left in the system, as the right hon. Gentleman suggested there may be, I want to remove or perhaps exorcise them as rapidly as possible.
The hon. Member for Upper Bann will appreciate that I cannot readily deal on the Floor of the House with the case of his constituent who was denied higher rate heating addition. He will be aware that his constituent could take the matter to an appeal tribunal, or the hon. Member may wish to raise the case with me first for further examination.
The hon. Gentleman and the hon. Member for Belfast, North referred to single payments under the supplementary benefits scheme. This is a subject about which I have learned an increasing amount as I have visited social security offices throughout the Province. As was said, the number of single payment awards has grown significantly in recent years—from 77,000 in 1982, to 126,000 in 1983, and, I estimate, to upwards of 200,000 in 1984. Expenditure in 1984 will be more than £20 million.
Although from time to time allegations are voiced about abuse of single payments, we have no evidence that this is a major problem. Clearly there is scope for abuse, but the Department of Health and Social Services does all that it can to prevent it. Home visits are made in most cases, and Girocheques are made payable to suppliers rather than to claimants where large sums are involved.
It is fair to say that one of the main reasons for the surge in single payments is the development of a thriving welfare rights movement, which I welcome. I intend to give

support to that movement through a grant to a regional welfare rights resource centre. It is also fair to say that the single payments aspect of the supplementary benefits scheme is being given particular attention by my hon. Friend, who is leading the review of the scheme. I should not be surprised — I do not put the point any more strongly, and I have no inside information at this stage — if we saw changes proposed in this aspect of supplementary benefit.
Meanwhile, I assure the House, and the hon. Member for Upper Bann in particular, that we shall do everything possible both to encourage full take-up of all the benefits to which claimants are entitled and to check against abuse.

Mr. McCusker: Will the Minister say more about this group to which he intends to offer financial assistance? Who has selected it, and what justification is there for giving it public funds?

Mr. Patten: The justification is the belief, which I hold strongly—I should be surprised if I did not share it with hon. Members—that we should do everything that we can to encourage the take-up of benefits to which people are statutorily entitled. That should involve work by my Department, particularly by local social security offices, and by the voluntary sector. That has already helped considerably; for example, through the action for community employment scheme.
I want to make sure that, wherever possible, the voluntary sector works with the statutory sector to encourage take-up. That is why we have been discussing with the Belfast law centre how we can best help provide a resource centre and training for local welfare rights groups which are legitimately involved. There are a large number of local groups which at present are helped by district councils and through the ACE scheme and in other ways. I assure hon. Members that the provision of more training and advice centrally should enable us to have a more sensible take-up scheme throughout the Province.
When I hear hon. Members properly talk about constituents who are not getting the benefits to which they are entitled, I think that there is an obligation on us, through our local social security offices and through the voluntary sector, to do all that we can to make people aware of the things they are entitled to receive.

Mr. Maginnis: Is the Minister not undermining the democratic process by encouraging voluntary groups of this sort and giving them almost statutory recognition? Can he assure us that a group such as this will be monitored in a way that will ensure that it is not exploited by organisations such as Sinn Fein—[Interruption.] I fear that it may be. Will the hon. Gentleman assure us that the members of this voluntary welfare group will be made known to those who have an electoral responsibility within the community?

Mr. Patten: The answer to the first substantive question of the hon. Gentleman is no. The answer to his second substantive question is yes. We are not talking about my Department giving grants to local groups but about giving funds to an organisation that is already heavily involved in helping local welfare rights activities. I have noted the point that the hon. Gentleman has made; it would be idiotic if we had not already done so. A great deal of this work has been carried on for some time with the Belfast Law Centre. We are discussing how it can help further.

Mr. Bell: Can I point out to the Parliamentary Under-Secretary of State that, while one understands the views which have been put forward tonight, we welcome the statement he has made that all those who ought to have benefit and who are entitled to benefit should be encouraged to have it and assure him that any steps that he may take in that direction will be warmly welcomed by us?

Mr. Patten: I am grateful to the hon. Member for his message of support. When hon. Members in other parts of the House note what is already happening and note also our intention to work closely with the voluntary sector to improve the quality of the advice that is provided, I hope that support in the House will be rather more widespread than it is now. The hon. Member for Belfast, South (Rev. Martin Smyth) asked a number of questions about social security and the expenditure covered by the Appropriation order. He referred initially to the Department of Health and Social Services and asked why we had not put in a shortfall bid for telephones for the housebound. Because shortfall money is available only for spending in the year in which it arises and because the expenditure on telephones which the hon. Member has in mind would be a recurring commitment for the health boards, it could not be covered in the way he suggested. The boards have been doing a great deal of work but they have to live within their budgets.
Hon. Members, including the hon. Member for Middlesbrough, asked questions about the housing benefit scheme. It is fair to say that the reformed scheme, to some of whose enhancements I referred earlier, has been operating reasonably satisfactorily in Northern Ireland. We have managed to avoid some of the problems that existed on this side of the water. However, reviews of the schemes are being undertaken in Northern Ireland as well as in Great Britain, mainly because of difficulties in Great Britain and concern about the rising cost of housing benefit. In the light of the reviews we expect to be able to publish proposals for change in the new year.
Hon. Members referred to the available scale margin. This is the amount deducted from certain additional requirements of claimants on the long-term rate of supplementary benefit. It was first introduced in 1966. It was intended to reflect the fact that the long term scale rate should cover nearly all additional needs, amounting at that time to 45p, the difference between the long term and the short term rates. Although the difference is now £7·65, the available scale margin remained at 50p, having been increased to that amount in 1968. To allow the previous relationship between the available scale margin and heating additions to remain unchanged would have resulted in the continuation of an increasingly anomalous situation. The Government therefore decided that it was reasonable to increase the margin to £1 and to apply it again to heating additions, which were originally within its scope.
In response to the hon. Member for Belfast, North in particular, I stress that no pensioner has suffered an overall reduction in income as a result of the change and that, for the first time, supplementary heating additions of £2·10 per week are automatically payable to householders aged 65 to 70. Householders over 70 already qualify. Furthermore, the higher rate addition of £5·20 per week is now given to pensioners aged 85 or over.

Rev. Martin Smyth: The hon. Gentleman said that pensioners over 70 qualify automatically and that no pensioner has suffered a loss as a result of the change. I have written to the hon. Gentleman giving him details of a case were that has happened.

Mr. Patten: I shall look into that case and reply to the hon. Gentleman as soon as I can.
The hon. Member for Mid-Ulster (Rev. William McCrea) mentioned rents. I am not sure whether it would be in order for me to dwell on that subject, but I think that the proposed increase of 4 per cent. for the coming year is not unreasonable. The hon. Gentleman referred to comparisons with the position in England, Wales and Scotland. I shall be delighted to give him the figures and, if necessary, to discuss the comparisons with him.
I assure the hon. Member for Mid-Ulster that there is no part of Northern Ireland in which the writ of the DHSS does not run. About 60 fraud investigation staff are doing sterling work throughout the Province, checking overtly and covertly on abuse and fraud. I shall be glad to supply the hon. Gentleman and other hon. Members with figures of prosecutions, which are quite impressive. I have met members of the fraud investigations staff to pay my personal tribute to their work, which is often done in particularly difficult circumstances.
As hon. Members know, my remit in Northern Ireland Departments runs fairly wide, but I am sure that it is a relief to all concerned that it does not cover agriculture, though I have been called on to say a word or two on the subject from time to time. As the hon. Member for Newry and Armagh (Mr. Nicholson) will confirm, I am all too conscious of my limitations in dealing with the subject.
I appreciate that hon. Members have serious worries about agriculture. Many have been expressed by the hon. Members for Antrim, North (Rev. Ian Paisley), who is chairman of the Assembly Committee, for Mid-Ulster, for Londonderry, East (Mr. Ross) and for Newry and Armagh and by the right hon. Member for South Down, though he touched principally on some of the constitutional aspects.
I shall not deal with all the detailed points raised, because I prefer to mention three major issues. Naturally, I shall draw the attention of my noble Friend the Under-Secretary to the vigorous speeches made in the debate, and I know that he will respond to them as quickly as he can.
With reference to the payment of the milk levy, my hon. Friend the Minister of State quoted a written answer given today by the Minister of State, Ministry of Agriculture, Fisheries and Food. I do not think that I can shed any further light on that. I gather from hon. Members that they thought that that had clarified the matter a little.
There is the question of the regional allocation of the milk quota, which I enjoyed debating with the hon. Member for Newry and Armagh on a memorable evening earlier this year. When my hon. Friend the Minister of State introduced the debate, he made it abundantly clear that he has great sympathy, as we all do, with Ulster milk producers. I should like to associate myself with those remarks. Nevertheless, Northern Ireland has received the full benefit of the 65,000 tonnes from the Community reserve, and an additional amount from the United Kingdom total. As a result, the percentage amount by which the Northern Ireland quota was less than 1983 deliveries will be no more than in other regions of the United Kingdom, although deliveries of milk in Northern Ireland have increased proportionately more between 1981


and 1983 than deliveries in England and Wales. My noble Friend is aware of the need to ensure that we again receive the 65,000 tonnes for 1985–86 in the price fixing round which is about to begin in Brussels.
The hon. Member for Mid-Ulster asked whether the reserve was sufficient to meet the needs of those producers. More than 3,800 farmers—almost half of all milk producers in Northern Ireland—submitted special case claims. The local panels have many cases remaining to be considered, including some from producers complaining against the Department's decision to reject cases which, in the Department's opinion, did not fulfil the criteria.
In addition, the tribunal received about 750 appeals from producers against provisional awards made by the local panels. Further appeals are expected. There is, therefore, some way to go before all cases are finalised. I cannot give a categoric response about the reserve question, as hon. Gentlemen understand. However, indications are that it will probably be necessary to scale down substantially the awards to these producers who have claimed secondary quotas and who meet development plans.
The subject of agriculture capital grants was also raised, especially by the hon. Members for Antrim, North and for Newry and Armagh. I appreciate that at first glance it must look strange and unfair that a province which provides only 6 per cent. of the United Kingdom's agriculture production should produce 33 per cent. of the cuts. However, that is not so surprising as a large proportion of any general reduction in grant rates was bound to fall on Northern Ireland, as more than one third of the United Kingdom's capital grant expenditure of this type is incurred in the Province. If a large share of the money goes to Northern Ireland, it is inevitable that a large share of the cuts will fall on the Province.
However, there is some good news for farmers. Because of the rather different needs in Northern Ireland —this touches on a point raised by the hon. Member for Londonderry, East—for a balance between conservation and agriculture, the Government have agreed that while grant rates for land reclamation will be reduced in the rest of the United Kingdom, they will not be reduced in Northern Ireland.
The right hon. Member for South Down asked about the control of veterinary products in the Republic. The proper handling and control of veterinary medicines in the European Community is essential for human and animal health. I therefore accept that we should continue to ensure that all concerned are alive to the need for agreed Community-wide measures. I undertake to draw the attention of my noble Friend to the right hon. Gentleman's remarks.
Finally, the right hon. Member for South Down made a point, in a particularly engaging style, which he has made on previous occasions, and to which I have replied. I doubt whether he will find my reply on this occasion any more convincing than he has found it previously. The arrangements that were criticised by the right hon. Gentleman are not new. As he conceded, Northern Ireland has had separate legislation and a separate Consolidated Fund for more than 60 years. There is no secret or hidden reason why the Government persist with the arrangements. We believe that a devolved Government would best meet the special needs of Northern Ireland's divided community, and my right hon. Friend the Secretary of

State is encouraging the political parties to work out mutually acceptable arrangements to that end. The right hon. Gentleman has reservations about that policy, but the Government, with the support of Parliament, are seeking to do that. In that light, the financial and legislative arrangements for Northern Ireland are appropriate and sensible.
I hope that I have dealt with most of the main points raised during the debate. If not, I repeat that I shall respond by letter as soon as possible. I have only one task remaining, which is to commend the order to the House. I am only sorry that, once again, we shall not enjoy the company in the Division Lobby of the right hon. Member for South Down and his disapproving colleagues.

Question put:—

The House divided: Ayes 126, Noes 8.

Division No. 56]
[11.22 pm


AYES


Alexander, Richard
Hunt, David (Wirral)


Ancram, Michael
Jackson, Robert


Baker, Nicholas (N Dorset)
Jessel, Toby


Baldry, Tony
Jones, Gwilym (Cardiff N)


Beaumont-Dark, Anthony
Jones, Robert (W Herts)


Bell, Stuart
Key, Robert


Benyon, William
King, Roger (B'ham N'field)


Blackburn, John
Knight, Gregory (Derby N)


Boscawen, Hon Robert
Knowles, Michael


Bowden, Gerald (Dulwich)
Knox, David


Boyson, Dr Rhodes
Lang, Ian


Brandon-Bravo, Martin
Lawler, Geoffrey


Brinton, Tim
Lennox-Boyd, Hon Mark


Browne, John
Lester, Jim


Bruinvels, Peter
Lightbown, David


Budgen, Nick
Lloyd, Peter, (Fareham)


Burt, Alistair
Lord, Michael


Butterfill, John
McCrea, Rev William


Carlisle, John (N Luton)
McCrindle, Robert


Carttiss, Michael
McCurley, Mrs Anna


Cash, William
Macfarlane, Neil


Chope, Christopher
McKay, Allen (Penistone)


Clark, Dr Michael (Rochford)
Maclean, David John


Clarke, Rt Hon K. (Rushcliffe)
McQuarrie, Albert


Conway, Derek
Major, John


Coombs, Simon
Malins, Humfrey


Cope, John
Mather, Carol


Couchman, James
Maude, Hon Francis


Cranborne, Viscount
Maxwell-Hyslop, Robin


Currie, Mrs Edwina
Mayhew, Sir Patrick


Dorrell, Stephen
Meyer, Sir Anthony


Douglas-Hamilton, Lord J.
Miller, Hal (B'grove)


Dover, Den
Mills, Iain (Meriden)


Dunn, Robert
Morris, Rt Hon A. (W'shawe)


Durant, Tony
Morris, M. (N'hampton, S)


Fallon, Michael
Moynihan, Hon C.


Fenner, Mrs Peggy
Needham, Richard


Finsberg, Sir Geoffrey
Newton, Tony


Forth, Eric
Nicholls, Patrick


Freeman, Roger
Norris, Steven


Gale, Roger
Oppenheim, Phillip


Galley, Roy
Osborn, Sir John


Garel-Jones, Tristan
Ottaway, Richard


Gregory, Conal
Page, Richard (Herts SW)


Griffiths, Peter (Portsm'th N)
Paisley, Rev Ian


Ground, Patrick
Patten, Christopher (Bath)


Hamilton, Neil (Tatton)
Pawsey, James


Hargreaves, Kenneth
Peacock, Mrs Elizabeth


Harris, David
Penhaligon, David


Harvey, Robert
Percival, Rt Hon Sir Ian


Hayward, Robert
Powell, William (Corby)


Henderson, Barry
Powley, John


Hickmet, Richard
Proctor, K. Harvey


Hind, Kenneth
Raffan, Keith


Hooson, Tom
Rathbone, Tim


Howarth, Alan (Stratf'd-on-A)
Rhodes James, Robert


Howarth, Gerald (Cannock)
Robinson, P. (Belfast E)






Rowe, Andrew
Thompson, Patrick (N'ich N)


Sainsbury, Hon Timothy
Wardle, C. (Bexhill)


Sayeed, Jonathan
Wheeler, John


Skeet, T. H. H.
Wiggin, Jerry


Stanbrook, Ivor



Steen, Anthony
Tellers for the Ayes:


Stewart, Allan (Eastwood)
Mr. Archie Hamilton and


Thompson, Donald (Calder V)
Mr. Michael Neubert.


NOES


Beggs, Roy
Smyth, Rev W. M. (Belfast S)


Forsythe, Clifford (S Antrim)
Walker, Cecil (Belfast N)


McCusker, Harold



Molyneaux, Rt Hon James
Tellers for the Noes:


Nicholson, J.
Mr. William Ross and


Powell, Rt Hon J. E. (S Down)
Mr. Ken Maginnis.

Question accordingly agreed to.

Resolved,
That the draft Appropriation (No. 3) (Northern Ireland) Order 1984, which was laid before this House on 20th November, be approved.

STATUTORY INSTRUMENTS, &c.

INTERNATIONAL IMMUNITIES AND PRIVILEGES

Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments &amp;c.)
That the draft Inter-American Development Bank (Immunities and Privileges) (Amendment) Order 1984, which was laid before this House on 28th November, be approved.
That the draft International Lead and Zinc Study Group (Immunities and Privileges) (Amendment) Order 1984, which was laid before this House on 28th November, be approved.
That the draft EUTELSAT (Immunities and Privileges) Order 1984, which was laid before this House on 28th November, be approved.—[Mr. Sainsbury.]

Question agreed to.

SOCIAL SECURITY

Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments &amp;c.)
That the draft Supplementary Benefit (Requirements) Amendment and Temporary Provisions Regulations 1984, which were laid before this House on 22nd November, be approved. —[Mr. Sainsbury.]

Question agreed to.

COMPANIES

Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments &amp;c.)
That the draft Companies (Share Premium Account) Regulations 1984, which were laid before this House on 22nd November, be approved.——[Mr. Sainsbury.]

Question agreed to.

House of Commons Members' Fund

Mr. Alfred Morris: I beg to move,
That the whole or any part of the sums deducted or set aside in the current year from the salaries of Members of Parliament under section 1 of the House of Commons Members' Fund Act 1939, and the whole or any part of the contribution determined by the Treasury for the current year under section 1 of the House of Commons Members' Fund Act 1957, as amended by the House of Commons Members' Fund and Parliamentary Pensions Act 1981, be appropriated for the purposes of section 4 of the House of Commons Members' Fund Act 1948, as amended by section 12 of the Parliamentary Pensions etc Act 1984.
It will probably be convenient to discuss with it the second motion,
That in pursuance of the provisions of section 3 of the House of Commons Members' Fund Act 1948 and of section 2 of the House of Commons Members' Fund and Parliamentary Pensions Act 1981 the maximum annual amounts of the periodical payments which may be made out of the House of Commons Members' Fund under the House of Commons Members' Fund Act 1939, as amended and the annual rate of any payments made under section 1 of the said Act of 1981 shall be varied as from 1st December 1984 as follows:
(a) for paragraph 1 of Schedule 1 to the said Act of 1939, as amended, there shall be substituted the following paragraph:
1. The annual amount of any periodical payment made to any person by virtue of his past membership of the House of Commons shall not exceed £2,199 or such sum as, in the opinion of the trustees, will bring his income up to £4,067 per annum whichever is the less:
Provided that if, having regard to length of service and need, the trustees think fit, they may make a larger payment not exceeding £4,245 or such sum as, in their opinion, will bring his income up to £6,113 per annum whichever is the less:
(b) for paragraph 2 of that Schedule there shall be substituted the following paragraph:
2. The annual amount of any periodical payment to any person by virtue of her being a widow of a past Member of the House of Commons shall not exceed £1,101 or such sum as, in the opinion of the trustees, will bring her income up to £2,969 per annum, whichever is the less:
Provided that if, having regard to her husband's length of service or to her need, the trustees think fit, they may make a larger payment not exceeding £2,118 or such sum as, in the opinion of the trustees,, will bring her income up to £3,986 per annum, whichever is the less:
(c) in paragraph 2A of that Schedule for the words 'the annual amount of any periodical payment' to the end of the paragraph, there shall be substituted the words:
'the annual amount of any periodical payment made to any such widower shall not exceed £1,101 or such sum as, in the opinion of the trustees, will bring his income up to £2,969 per annum, whichever is the less:
Provided that if, having regard to his wife's length of service or to his needs the trustees think fit, they may make a larger payment not exceeding £2,118 or such sum as, in the opinion of the trustees, will bring his income up to £3,986 per annum, whichever is the less:
(d) in section 2(1) of the said Act of 1981, for the words from the beginning to the end of paragraph (b) there shall be substituted the words:
'the annual rate of any payments made under section 1 shall be—

(a) £1,282 if the payments are made to a past Member; and
(b) £641 if the payments are made to the widow or widower of a past Member'.



The motions stand in my name and those of hon. Members on both sides of the House who share with me, as trustees, the responsibility of administering the House of Commons Members' Fund.
Right hon. and hon. Members enjoy today pension rights under the Parliamentary Contributory Pension Fund, but, as the House knows, this has not always been so. Our colleagues who left the House before 1964 have no pensions in respect of their service in the House, and many now live in considerably reduced and often straitened circumstances. This applies especially to former Members who are now of advanced years and, even more so, to many widows and widowers. The Members' Fund has existed since 1939 to provide assistance to former Members an their dependants, but the help which my fellow trustees and I are able to provide from the Members' Fund is modest in the extreme. We are deeply conscious of the need to improve their position and are giving urgent consideration to what steps might be taken to make this possible.
A further problem is that the needs of our former colleagues, and of widows or widowers, is not always known to us. I shall be most grateful, therefore, if hon. Members will let me know, as chairman of the trustees, of any case of which they become aware of a former Member or his or her dependants who are in need of help. I strongly urge any hon. Member who knows of a case of hardship to let us see if we can help.
In the meantime, we are now increasing the present levels of grants and payments which may be made under the Members' Fund legislation in line with recent increases approved for public service and national insurance retirement pensions. This is the purpose of the motions. I hope that they will receive the unanimous support of the House, for I can assure right hon. and hon. Members that the experience of the trustees has made us realise how much further provision is needed and also how very much it will be welcomed by those who will benefit.
I need not detain the House at length in moving the motions, since the provisions for which we seek approval are set out in detail in the motions on the Order Paper. Paragraph 1(a) sets out the new provisions for grants to ex-Members. At present, the Trustees are authorised to make grants to ex-Members of up to £2,091, provided that the total income of the applicant, including the grant, does not exceed £3,868. The grant is now raised to £2,199, and the income limit goes up to £4,067. To that is added the provision by which the trustees will be authorised to make larger payments, having due regard to length of service and need, of a grant of up to £4,245 provided that the income of the applicant, together with the grant, does not exceed £6,113.
Grants to widows are set out under paragraph (b). At present the grant to a widow of an ex-Member is £1,047 provided that her income, including the grant, does not exceed £2,824. That grant is raised to £1,101 and the income limit goes to £2,969. There follows the provision by which, having regard to her husband's length of service, or to need, the trustees will be enabled to make grants of up to £2,118 provided that the widow's income with the grant does not exceed £3,986.
Grants to widowers are set out under paragraph (c). The provisions here are similar to those for widows under paragraph (b). In subparagraph (d) we refer to the "as of right" payments from the Members' Fund to former Members who had 10 years' service before October 1964,

and to widows and widowers of such Members, provided for by the House of Commons Members' fund and Parliamentary Pensions Act 1981, which came into force on 19 March 1981. That provision seeks to increase the payments, at present at the rate of £1,218 per annum to former Members, to £1,282 per annum, and the payments to widows or widowers from £609 per annum to £641 per annum.
Those new provisions will all be retrospectively effective from 1 December 1984. They provide for increases of approximately 5·1 per cent. across the board, in line with the provisions contained in the Pensions Increase (Review) Order 1984. The additional expenditure arising is £7,200.
It is impossible on this occasion for us not to be reminded of the tragic loss of the late Member for Enfield, Southgate, who so cruelly lost his life two months ago. Sir Anthony Berry was appointed by this House as a trustee of the Members' fund in July last year and at once played a full and active part in all our work. He was most anxious to ensure that everything possible was done to help his former colleagues. He had a most genuine and humane concern for everyone who needed the help we could give. We honour his memory and shall sorely miss him.

Mr. Albert McQuarrie: I congratulate the right hon. Member for Manchester, Wythenshawe (Mr. Morris) on moving the motion. I am sure that the House will welcome the fact that the Committee in its wisdom has decided to look after the interests of former Members and their widows and widowers who find themselves in pecuniary circumstances not of their own making. I sincerely hope that the House will join with the right hon. Gentleman and pass the resolution unanimously.

Question put and agreed to.

Resolved,
That the whole or any part of the sums deducted or set aside in the current year from the salaries of Members of Parliament under section 1 of the House of Commons Members' Fund Act 1939, and the whole or any part of the contribution determined by the Treasury for the current year under section 1 of the House of Commons Members' Fund Act 1957, as amended by the House of Commons Members' Fund and Parliamentary Pensions Act 1981, be appropriated for the purposes of section 4 of the House of Commons Members' Fund Act 1948, as amended by section 12 of the Parliamentary Pensions etc. Act 1984.

HOUSE OF COMMONS MEMBERS' FUND

Resolved,
That in pursuance of the provisions of section 3 of the House of Commons Members' Fund Act 1948 and of section 2 of the House of Commons Members' Fund and Parliamentary Pensions Act 1981 the maximum annual amounts of the periodical payments which may be made out of the House of Commons Members' Fund under the House of Commons Members' Fund Act 1939, as amended and the annual rate of any payments made under section 1 of the said Act of 1981 shall be varied as from 1st December 1984 as follows:
(a) for paragraph 1 of Schedule 1 to the said Act of 1939, as amended, there shall be substituted the following paragraph:
1. The annual amount of any periodical payment made to any person by virtue his past membership of the House of Commons shall not exceed £2,199 or such sum as, in the opinion of the trustees, will bring his income up to £4,067 per annum whichever is the less:
Provided that if, having regard to length of service and need, the trustees think fit, they may make


a larger payment not exceeding £4,245 or such sum as, in their opinion, will bring his income up to £6,113 per annum whichever is the less:
(b) for paragraph 2 of that Schedule there shall be substituted the following paragraph:
2. The annual amount of any periodical payment to any person by virtue of her being a widow of a past Member of the House of Commons shall not exceed £1,101 or such sum as, in the opinion of the trustees, will bring her income up to £2,969 per annum, whichever is the less:
Provided that if, having regard to her husband's length of service or to her need, the trustees think fit, they may make a larger payment not exceeding £2,118 or such sum as, in the opinion of the trustees, will bring her income up to £3,986 per annum, whichever is the less:
(c) in paragraph 2A of that Schedule for the words 'the annual amount of any periodical payment' to the end of the paragraph, there shall be substituted the words:
'the annual amount of any periodical payment made to any such widower shall not exceed £1,101 or such sum as, in the opinion of the trustees, will bring his income up to £2,969 per annum, whichever is the less:
Provided that if, having regard to his wife's length of service or to his needs the trustees think fit, they may make a larger payment not exceeding £2,118 or such sum as, in the opinion of the trustees, will bring his income up to £3,986 per annum, whichever is the less:
(d) in section 2(1) of the said Act of 1981, for the words from the beginning to the end of paragraph (b) there shall be substituted the words:
'the annual rate of any payments made under section 1 shall be—

(a) £1,282 if the payments are made to a past Member; and
(b) £641 if the payments are made to the widow or widower of a past Member'. —[Mr. Alfred Morris.]

PETITIONS

Human Embryos

Mr. David Maclean: I beg to ask leave to present to the House a petition in the names of Ann Twomey of Wetheral and Mary Delap of Great Corby and on behalf of a further 157 of my constituents of Penrith and The Border. The petition is entitled,
Petition for the Protection of the Human Embryo",
and my constituents are responding to the Government's invitation to comment on the report of the Warnock committee.
My petitioners
Welcome the Statement in the Report of the Committee of Inquiry into Human Fertilisation and Embryology (the Warnock Report) that "the status of the embryo is a matter of fundamental principle which should be enshrined in legislation" and its recommendation that the embryo of the human species should be afforded protection in law.
I entirely agree with that statement.
My petitioners go on to affirm that the newly fertilized human embryos are real individual human beings, and they therefore oppose all such practices as are recommended in the report which discriminate against the embryo or violate his or her human dignity and right to life. They conclude:
Wherefore your petitioners pray that the House of Commons will take immediate steps to enact legislation which forbids any procedure that involves purchase or sale of human embryos, the discarding of human embryos, their use as sources of transplant tissue or as subjects for research or experiment (unless this is done solely for the benefit of the embryo concerned). And your Petitioners, as in duty bound, will every pray, etc.

To lie upon the Table.

Mr. James Wallace: I beg to ask leave to present a petition which has been signed by some 720 of my constituents, mostly in the Shetland part of my constituency. I think that that number amounts to about 5 per cent. of the electorate of that part of my constituency. The terms of the petition for the protection of the human embryo are substantially those that have already been referred to by the hon. Member for Penrith and The Border (Mr. Maclean). The petition asks
that the House of Commons will take immediate steps to enact legislation which forbids any procedure that involves purchase or sale of human embryos, the discarding of human embryos, their use as sources of transplant tissue or as subjects for research or experiment (unless this is done solely for the benefit of the embryo concerned).
The petition concludes:
And your Petitioners, as in duty bound, will every pray, etc.
Those who have signed the petition affirm, as I do, that the status of the embryo is a matter of fundamental principle and that the embryo of the human species should be afforded protection in law. I present the petition in that spirit of support.

To lie upon the Table.

Mr. Albert McQuarrie: I beg to ask leave to present three petitions from residents within the Banff and Buchan constituency. The first petition was initiated by Mrs. Marie Stephens of 39 Prince road, Peterhead, and contains 392 signatures. The second was initiated by the Reverend I. D. Zass-Ogilvie, rector of St.
Marnon's Scottish episcopal church in the village of Aberchirder. The third was initiated by Edith M. Smith of 22 Schoolhendry street, Portsoy, and contains 47 signatures.
All three petitions are couched in identical terms and affirm the petitioners' belief that the newly-fertilised human embryo is a real living individual human being. All three petitions also oppose all practices which discriminate against the embryo or violate his or her human dignity and right to life.
The petitioners continue as follows:
Wherefore your Petitioners pray that the House of Commons will take immediate steps to enact legislation which forbids any procedure which involves purchase or sale of human embryos, the discarding of human embryos, their use as sources of transplant tissue or as subjects for research or experiment (unless this is done solely for the benefit of the embryo concerned).
The three petitions conclude:
And your Petitioners, as in duty bound, will ever pray, etc.

To lie upon the Table.

Mr. Patrick Thompson: I beg to ask leave to present a public petition for the protection of the human embryo, which stands in the name of Joan Johnson and is signed by more than 500 of my constituents from all parts of Norwich, North. I present it in a spirit of support.

To lie upon the Table.

Mr. Gerald Bermingham: I have a petition to present in respect of 3,662 people in my constituency and surrounding areas that prays in the terms already mentioned tonight. I associate myself with the sentiments expressed in the petition collected by J. Fox. My constituents pray that
the House of Commons will take immediate steps to enact legislation which forbids any procedure which involves purchase or sale of human embryos, the discarding of human embryos, their use as sources of transplant tissue or as subjects for research or experiment (unless this is done soley for the benefit of the embryo concerned).
And your Petitioners, as in duty bound, will ever pray etc.

To lie upon the Table.

Mr. Peter Bruinvels: I also beg to ask leave to present a petition in similar terms from the constituents of Leicester, East, which I have the honour to represent, and from all parts of the city of Leicester and the county of Leicestershire.
The petition contains the signatures of 976 people, including many from Leicestershire Life. It rightly draws attention to certain recommendations in the Warnock report, particularly in relation to the status of the embryo. The petition reads:
the House of Commons will take immediate steps to enact legislation which forbids any procedure which involves purchase or sale of human embryos, the discarding of human embryos, their use as sources of transplant tissue or as subjects for research or experiment (unless this is done solely for the benefit of the embryo concerned).
I heartily endorse all the sentiments expressed in that petition, which has been supported throughout the county. The petition ends
And your petitioners, as in duty bound, will ever pray, etc.

To lie upon the Table.

Mental Health Commission Secretariat

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sainsbury.]

Mr. Stan Thorne: I am indebted to Mr. Speaker for being given the opportunity to raise an issue which, although not earth-shattering, is of considerable importance following the passage of the Mental Health Act 1983 which set up the Mental Health Commission.
The Minister and I sat on the Committee that considered that measure. Various discussions, which are not connected with the work of the secretariat, took place, although much of what we determined in that Committee gave life to the secretariat.
The secretariat's main function is to protect the rights of formally detained psychiatric patients by investigating complaints by such patients and by visiting hospitals where they are detained.
The commissioners are either professionals associated with psychiatry or interested and involved lay people. Its organisation is split into three regions—the north-west, the north-east and the south. Each region is serviced by its own secretariat, with support staff, totalling only about 15.
My debate is about the proposed centralisation of that secretariat. Before dealing with that, I shall deal with a misleading answer given to me by the Minister. He said that commissioners do not receive fees. Different classes of commissioners exist. The retired, the self-employed and those employed by private organisations, in addition to their expenses, receive fees at a rate of a little more than £70 per day. The employers of those employed by public bodies other than the Health Service are remunerated for loss of their employees' time.
I regret that, unfairly, where commissioners are Health Service employees, neither their employers—the district health authorities—nor the commissioners receive any financial consideration for their loss of working time on commission business that may involve several days per week, evenings and even weekend work. NHS-employed commissioners must be struggling to maintain an adequate input to keep their jobs going. Their hard-pressed district health authorities, with their manpower targets and cash limits to meet, must regret releasing their staff without compensation.
Many of the staff are highly experienced and valuable. After all, presumably that is why they were appointed by the Secretary of State. Many of their jobs involve direct patient services. I suggest that the discrimination against the Health Service appointees is likely to present a powerful disincentive to health authorities supporting their employees' appointment to the commission and to such employees to accept appointments in future. I urge the Secretary of State to regularise the position of Health Service-employed commissioners at an early date.
The commission consists of part-time commissioners — some of whom are in an anomolous position in respect of fees-serviced by a full-time but small secretariat organised on a regional basis. It has been in existence for just over one year. As the Minister has acknowledged, its achievements are impressive, yet already it is proposed radically to alter its organisational structure. That was admitted by a DHSS Minister in answer to my recent parliamentary question.
The proposal is no longer to have separate secretariats in the three regions, but to centralise them in the south-east, in London. I maintain that one reason why the commission has been able to establish credibility so quickly is that it is decentralised and regionalised. Thus, in the north-west, the commission covers two special hospitals—Moss Side and Park Lane. Much of the work of the commission is very much concerned with those institutions.
The patients in the hospitals have been able to relate to a commission which, for them, is almost just down the road. More importantly, it stands a chance of being seen as independent of "them" — the DHSS and the Home Office in London.
The commissioners have been able to establish good working relationships with the present secretariat, so that, as has been acknowledged, a commission that is part-time and largely unpaid has become an efficient, practical and working body. Yet, already, it is proposed to destroy the working relationships and replace them with what will inevitably mean more faceless relationships with more anonymous civil servants in London.
From both points of view—that of the patients served by the commission, and the efficiency and good working relationship within the commission — the proposed change cannot make good sense, especially coming, as it does, so soon after the inception of the commission. More general considerations concern me as well. The proposal represents yet another, albeit small, example of the drift of jobs away from the north-west and north-east, for example, into the south-east and London. It seems to represent yet another imposition of a doctrinaire policy of centralisation against the wishes of those concerned.
I understand that of the two commission regions concerned, the commissioners in the north-west were unanimous in their objection to the proposed centralisation, as were many of the commissioners in the north-east.
Worse than this, a centralised secretariat of civil servants in central London, dealing sometimes with highly sensitive complaints involving the DHSS, starts to sound like the beginning of the end of the independence of the commission. I consider that independence —I thought that the Minister did too—to be essential. It will no doubt be seized upon by patients' rights groups, which will perceive this, rightly or wrongly, as the first nail in the coffin for a body for which they had high hopes.
I understand that the secretariat shares the same in-line management structures as the managers of special hospitals. Centralisation into London is bound to lead to concern, justified or otherwise, that the vital and necessary independence of the commission and its secretariat will be eroded within these management structures.
The Minister may wish to claim that the proposed centralisation is necessary on cost and efficiency grounds. I dispute that. The commission has a modest budget which should not be made so modest that it cannot carry out its functions. It has a small support staff. In the three regional secretariats there is a total staff of about 15, including typists, and they have the job of organising the part-time commissioners, who are scattered throughout the country, to visit every establishment where there are detained patients at least once a year, and once a month to special hospitals. They deal with many complaints and organise second opinions for compulsory treatments within days of

the request coming from hospitals, including all the paperwork and documentation that must be involved. Against that background, a staff of 15 can be considered only as minimal.
As I understand it, the proposed reorganisation will do nothing to reduce the number of secretariat staff. The proposed centralisation will lead almost certainly to more expenditure on incidentals such as travelling, telephone and office rental costs. Given the nature of the work that I have outlined, it is difficult to see how greater efficiency can ensue.
Another claim that the Minister may wish to make in justification of the proposal is that the central policy committee within the commission has agreed to the proposal. Far from being a justification, I would submit that that agreement raises other concerns. I know that some of the commissioners are concerned about the work and role of the committee, which is appointed by the Secretary of State. They consider it to be out of touch with the regions, in that it has agreed with the proposal against the wishes of the regional commissions.
The proposal to centralise the secretariat has met with considerable opposition from commissioners. It will decrease markedly the credibility of the commissioners as an independent body seeking to protect the rights of formally detained patients. The proposal represents yet another centralising drift of jobs and influence from the regions to London.
The new commission has a difficult job, and our efforts must be directed towards supporting, not undermining, it. This country's recent record on human rights has been somewhat tarnished in the eyes of the rest of the developed world. We have set up a body to safeguard civil rights and guarantee minimum standards of care and treatment to a vulnerable section of our community which, sadly, until recently as a society we preferred to lock up as far away from us as possible and forget. We must not demean our advances by petty-minded and premature bureaucratic blinkering or efforts at minuscule financial savings.
I should like the Minister of Health to give the House certain assurances. Will the right hon. and learned Gentleman reconsider his decision to centralise the commission's secretariat and instead follow the opinion of the majority of the commissioners affected and ensure adequately staffed regional secretariats? If the right hon. and learned Gentleman has not yet made a decision to centralise — I must admit that an earlier reply to a parliamentary question seemed to suggest that the final decision had not been taken—will he reject the advice of his civil servants, accept the unanimous view of the north-west commissioners and at least ensure an adequately staffed regional secretariat within the north-west? If the right hon. and learned Gentleman feels unable to depart from the concept of a centralised secretariat, will he consider carefully whether it must be centralised into London? I understand that there is more than adequate office space next to the offices of the north-west secretariat and within the same building to house the whole centralised secretariat. There seems little good reason—other than dogma — why London should always be chosen as the site for the centralised secretariat, when adequate and arguably more suitable accommodation exists elsewhere.
Could the Minister leave the north-west on its own if he is determined to centralise and take in the north-east with London? The right hon. and learned Gentleman will


be aware that the National Health Advisory Service consists of people who are seconded from their employing authority. Why cannot the same be done with the mental health commissioners? Whatever the decision the Minister eventually reaches, I hope that he can say that there will be no enforced redundancies among the staff of the existing secretariat.

The Minister for Health (Mr. Kenneth Clarke): I thank the hon. Member for Preston (Mr. Thorne) for raising this matter on the Adjournment. As he said, the subject matter is hardly earth-shattering, but I agree with him about its importance. We served on the Standing Committee on the Bill which eventually became an Act and paved the way for the creation of the Mental Health Act Commission. During the Committee's proceedings we agreed on rather more occasions than we are accustomed to do when considering more general political issues in the House. We both share and support the broad objectives of the legislation and support the work of the new commission. We wish to defend its independence, which was a matter which the hon. Member mentioned. I am sure that we both congratulate it on its work so far.
Both of us are fairly defiantly provincial, which is an interest we share, and, as the hon. Gentleman said, the present secretariat is divided, with five people in London, four in Liverpool and four in Nottingham. I have no doubt that the hon. Gentleman speaks with an interest in Liverpool, but I represent part of the county of Nottingham and assure him that I have no innate desire to see the secretariat of this or any other body situated in central London if there are compelling reasons to the contrary.
I agree with the hon. Gentleman in supporting the work of the commission. It was established in 1983 under an order and regulations following the powers contained in the Mental Health Act 1983. Its work began on 30 September 1983. I am pleased to join in the tribute which, by implication, the hon. Member paid to the work of the chairman, my noble Friend Lord Colville, and his fellow commissioners, who have made impressive progress.
The principal purpose of the Act and the commission's work is to look after the interests of patients who are suffering from mental illness. The commission must protect the interests of those patients whose mental disorder takes such a serious form that they must, in their interests and for the protection of others, be compulsorily detained.
People in such a position suffer a double disadvantage. They suffer a serious mental disorder and they lose the freedom of movement, which is such a valued possession of all in a society such as ours. The law therefore has to make special provision to protect the interests of detained patients. The Act was intended to make radical changes to the law to bring it up to date and to add to the protection of patients.
The commission was set up to look after the legal and more general rights of those patients. It has four main functions. First, members of the commission pay regular visits to hospitals where patients are detained to monitor the standards of care and treatment provided and to ensure that the various requirements of the Act are being satisfied.
Secondly, the commission's members operate the statutory provisions relating to consent to treatment. In some limited circumstances, those provisions affect informal patients also. At the moment, the commission is

interested mainly in the consent to treatment of detained patients. Some of the medical members of the commission undertake second-opinion visits in connection with consent to treatment. The commission also provides the doctors to carry out that work.
Thirdly, the commissioners receive and act on complaints or other representations made by or on behalf of detained patients. Fourthly, the members of the commission are preparing a draft code of practice which will contain guidance on compulsory admissions to hospitals or nursing homes and guidance on the treatment of patients suffering from mental disorder.
The purpose of the code of practice is to promote good practice generally throughout the service. After we have undertaken the required consultations, we shall table the code for Parliament to consider. That is a wide range of work, which the commission is undertaking with vigour and enthusiasm. The commissioners, in the first year of operation, as part of the regular visiting programme already have paid one or more visits to hospitals where there are detained patients throughout England and Wales. They are also dealing with a considerable number of complaints from patients and their friends and relatives.
The commission is a large body. It must he, to undertake all this work across the country. There are 90 members. By discipline, the largest group is doctors. The other main disciplines represented are nurses, social workers, psychologists and lawyers. There are also lay members, and one or two members with a special knowledge of mental health services. The members are drawn from all parts of England and Wales.
While individual members bring their experience and specialist knowledge to the commission's work, one of the impressive features of the first year's work is the way in which members have seen themselves as commissioners first and not as representatives of specialist interests. A strong corporate team spirit has been forged.
The hon. Gentleman mentioned the fees paid to the commission's members and suggested that we were in some way making divisions between them according to classes and not dealing with them fairly. It is true that we pay some compensation for loss of earnings to those in private employment, and we also make arrangements to pay the travelling expenses of all commissioners. There are some special arrangements to pay for additional work done by doctors who give up parts of their practice to serve on the commission but do extra sessions to provide a service to patients in their localities. Otherwise, in drawing up the statement of compensation for members of the commission, we try to act fairly between them all.
I shall write to the hon. Gentleman setting out fully and clearly the precise arrangements, in order to try to answer his fears that we are being unfair as between one category and another. He was, however, particularly concerned about those who worked for health authorities and thought that we might be deterring the authorities as employers, or the employees themselves, by not providing either with compensation for loss of earnings.
We believed that, for those working for health authorities, work for the Mental Health Act Commission would be regarded as part of their ordinary service to the NHS. I have no evidence that anyone has been deterred, and I have no evidence that any health authority has discouraged any of its employees from serving on the commission. I hope that that has not happened, but I shall


look into the matter and give the hon. Gentleman a full letter. He can then respond if he feels that our arrangements are in some way unfair and discriminatory.
The hon. Gentleman's main concern is with the organisation of the commission. In drawing up the organisation we followed, but did not exactly match, the organisation of the parallel mental health review tribunals. They are slightly different bodies created under the Mental Health Act 1959. Their members are appointed by my right hon. and learned Friend the Lord Chancellor. They hear appeals against detention by detained patients, and have been working for many years.
The tribunals have found that a large proportion of their hearings arise from patients who are detained in the four special hospitals located in Berkshire, Nottinghamshire and near Liverpool. Because a significant proportion of all tribunal hearings take place at those hospitals, the secretariat offices of the mental health review tribunals are located in London, Nottingham and Liverpool, and from there the tribunals derive the secretarial support that they need.
I mention those because when the Mental Health Act Commission came into existence that pattern was to some extent followed. The commission divided the NHS regions in the country into three groups, one covering the southern half of the country, one the regions on the western side, from the west midlands northwards, and the third the eastern side, from Trent northwards. Each of these three territorial teams has its own chairman and vice-chairman, and organises its own programme of regular work under the various headings which I have described.
Essentially, my noble Friend Lord Colville of Culross is supported by a small central policy committee. When the organisation was first being set up, we rejected the suggestion that it should share the secretariat with the mental health review tribunals, because the two bodies have quite different functions and ought to have separate identities. However, we followed the pattern which I have described, which the tribunals had previously followed, and we now describe our areas within the Mental Health Act Commission as the southern, north-eastern and north-western regions of the commission.
There is a total of 15 staff in the commission's secretariat, all but one being seconded officers from my Department, and almost all of them serving with one of the three regional teams. All those staff have thrown themselves with great enthusiasm into the work of the commission, and their work has been much appreciated by the commissioners.
A little while ago it was decided that as it was now 12 months since the new Act was introduced, and it was time

for the Department's staff inspectors to examine the work of the secretariat staff of both the mental health review tribunals and the Mental Health Act Commission. We use staff inspectors regularly inside our Department, just as we do inside every Department of central Government. It is a well-established procedure for looking at the distribution of the work load and making sure that organisational questions are addressed in a way which ensures that work is undertaken in the most efficient and economical manner.
The inspectors in this case interviewed individual staff members and looked at the replies to standard questionaires. After discussion of a draft report with local management, they drew up a final report with their recommendations. It was those staff inspectors who recommended the centralisation of the services.
In due course I can provide the hon. Gentleman with a list of the eight reasons which led the inspectors to recommend the centralisation of the secretariat. They were first drawn in by a request from the regions for more staff, because various problems had arisen in organising the work properly with such comparatively small numbers in each of the centres. It was very difficult to cover for staff absence, holidays or sudden surges of work. It was found that that difficulty had been overcome by a rather heavy use of casual labour. No fewer than 42 man weeks of casual labour had been used in the period 1 October 1983 to 30 June 1984. Therefore, the recommendation was that greater efficiency of operation could be achieved if all staff were located at the London headquarters office of the commission.
I listened to what the hon. Gentleman said. No final decision has been taken, although the central committee, despite some misgivings on the part of some members, has supported the recommendation. I shall put the points made by the hon. Gentleman to my noble Friend Lord Colville of Culross and will look into the matter again to see whether the commission is really satisfied that it needs to centralise its staff. We do not want more staff, but we do want efficient organisation. We do not want unnecessarily to increase costs. We are both agreed that we want to support the work of the commission. There is no point in centralising it if that is not useful to the commission. Therefore, I promise the hon. Member that I shall take his points on board and come back to him in due course with a considered response. I shall hope to amplify the reasons for centralisation if that goes ahead or to come back to the hon. Gentleman with the reasons for its reconsideration if my noble Friend considers that, on balance, this matter is worth reopening.

Question put and agreed to.

Adjourned accordingly at sixteen minutes past Twelve o' clock.